SOURCE: PIMCO

PIMCO

September 21, 2010 08:00 ET

PIMCO Launches 'Build America' and Investment Grade Bond ETFs

BABZ and CORP Broaden Firm's Lineup of ETF Solutions

NEWPORT BEACH, CA--(Marketwire - September 21, 2010) -  PIMCO, a leading global investment solutions provider, has launched two new exchange-traded funds (ETFs) providing investors efficient access to the firm's fixed-income expertise.

The PIMCO Build America Bond Strategy Fund (Ticker: BABZ) is an actively managed ETF offering access to taxable municipal bonds issued under the Build America Bonds (BABs) program. The fund seeks to capture attractive yield opportunities in this sector while also avoiding securities from municipalities that PIMCO believes face deteriorating credit quality. The fund is managed by John Cummings, executive vice president and head of PIMCO's municipal bond desk.

The PIMCO Investment Grade Corporate Bond Index Fund (Ticker: CORP) is an index ETF that seeks to track its benchmark index with an optimized exposure to investment grade U.S. corporate debt issues that are primarily component securities of the benchmark. PIMCO's proprietary optimization process seeks to avoid those securities that the firm believes may be hard to trade or deemed to have the highest risk of credit loss. The fund is managed by Vineer Bhansali, managing director.

"These new funds broaden investor access to two important fixed income areas -- Build America Bonds and investment-grade corporate bonds -- using the efficient, transparent ETF format," said Tammie Arnold, managing director and head of PIMCO's global ETF business. "As with all PIMCO investment products, our ETFs benefit from PIMCO's nearly four decades of investment management experience, strong analytics and risk management expertise."

The PIMCO Build America Bond Strategy Fund provides access to the Build America Bond market with the added benefits of PIMCO's active credit and portfolio management expertise and institutional pricing capabilities. Build America Bonds are taxable municipal bonds that have increased in popularity since they were first authorized under the American Recovery and Reinvestment Act of 2009. (While the BABS program is scheduled to expire at the end of 2010, PIMCO is optimistic that the program will be extended.)

The PIMCO Investment Grade Corporate Bond Index Fund provides exposure to investment-grade corporate bonds that are primarily component securities of The BofA Merrill Lynch US Corporate Indexsm, while also seeking to closely match the index duration, curve and credit characteristics. The fund seeks to optimize trade execution, reduce transaction costs and minimize tracking error by avoiding bonds that are hard to obtain or at high risk of near term default, while emphasizing bonds that may provide liquidity and market access. 

About PIMCO

PIMCO, founded in 1971, is a global investment management firm serving a full range of institutional and retail investors worldwide. Our reputation as one of the world's top asset managers rests on our combination of a long-term investment approach, superior client servicing and cutting edge technology. With offices in ten countries in North America, Europe and Asia, we manage investments across a full spectrum of global financial markets. Our success is built on our goal of consistently providing attractive returns while maintaining a strong culture of risk management and long-term discipline. PIMCO is owned by Allianz Global Investors, a subsidiary of the Munich-based Allianz Group, a leading global insurance company.

Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. This and other information are contained in the Fund's prospectus, which may be obtained by contacting your PIMCO representative. Please read the prospectus carefully before you invest or send money.

Exchange Traded Funds ("ETF") are afforded certain exemptions from the Investment Company Act. The exemptions allow, among other things, for individual shares to trade on the secondary market. Individual shares cannot be directly purchased from or redeemed by the ETF. Purchases and redemptions directly with ETFs are only accomplished through creation unit aggregations or "baskets" of shares. Shares of an ETF are bought and sold at market price (not NAV). Brokerage commissions will reduce returns. Investment policies, management fees and other information can be found in the individual ETF's prospectus.

Investing in the bond market is subject to certain risks including the risk that fixed income securities will decline in value because of changes in interest rates; the risk that fund shares could trade at prices other than the net asset value; and the risk that the manager's investment decisions might not produce the desired results. Build America Bonds issued by state and local governments are taxable issues. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not insure against loss.

The value of most bond funds and fixed income securities are impacted by changes in interest rates. Bonds and bond funds with longer durations tend to be more sensitive and more volatile than securities with shorter durations; bond prices generally fall as interest rates rise. Passive ETFs use an indexing approach and may be affected by a general decline in market segments or asset classes relating to its Underlying Index. Passive ETFs invest in securities and instruments included in, or representative of, its Underlying Index regardless of the investment merits of the Underlying Index.

The BofA Merrill Lynch US Corporate Indexsm is an unmanaged index comprised of U.S. dollar denominated investment grade, fixed rate corporate debt securities publicly issued in the U.S. domestic market with at least one year remaining term to final maturity and at least $250 million outstanding. It is not possible to invest directly in an unmanaged index.

"BofA Merrill Lynch" and "The BofA Merrill Lynch US Corporate Indexsm" are reprinted with permission. © Copyright 2010 Merrill Lynch, Pierce, Fenner & Smith Incorporated ("BofA Merrill Lynch"). All rights reserved. "BofA Merrill Lynch" and "The BofA Merrill Lynch US Corporate Indexsm" (the "Index") are service marks of BofA Merrill Lynch and/or its affiliates and have been licensed for use for certain purposes by PIMCO on behalf of the PIMCO Investment Grade Corporate Bond Fund (the "Fund") that is based on the Index, and is not issued, sponsored, endorsed or promoted by BofA Merrill Lynch and/or BofA Merrill Lynch's affiliates nor is BofA Merrill Lynch and/or BofA Merrill Lynch's affiliates an adviser to the Fund. BofA Merrill Lynch and BofA Merrill Lynch's affiliates make no representation, express or implied, regarding the advisability of investing in the Fund or the Index and do not guarantee the quality, accuracy, timeliness or completeness of the Index, index values or any index related data included herein, provided herewith or derived therefrom and assume no liability in connection with their use. As the index provider, BofA Merrill Lynch is licensing certain trademarks, The BofA Merrill Lynch US Corporate Indexsm and trade names which are composed by BofA Merrill Lynch without regard to PIMCO, the Fund or any investor. BofA Merrill Lynch and BofA Merrill Lynch's affiliates do not provide investment advice to PIMCO or the Fund and are not responsible for the performance of the Fund.

Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Statements concerning financial market trends are based on current market conditions, which will fluctuate. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Pacific Investment Management Company LLC, 840 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2010, PIMCO.

ETF Shares are distributed by Allianz Global Investors Distributors LLC, 840 Newport Center Drive, Newport Beach, CA, 92660 888-400-4ETF.

Contact Information

  • Contact
    Mark Porterfield
    PIMCO – Media Relations
    949-720-6397