(NYSE: MUNI), anactively managed exchange-traded fund (ETF) that accesses PIMCO’s municipal bond expertise in building a portfolio of primarily high-quality, intermediate maturity, AMT-free municipal bonds whose income is exempt from federal and, in some cases, state tax. (MUNI) also seeks national diversification. The ETF will be managed by John Cummings, executive vice president and head of PIMCO’s municipal bond desk.
“The U.S. fiscal outlook will likely include higher marginal tax rates in the years to come, raising the need for tax-efficient investments. At the same time, however, municipalities and states face a host of challenges in managing their budgets, so the importance of credit analysis is heightened,” said Mr. Cummings. “With MUNI, PIMCO aims to provide investors with a carefully selected, diversified portfolio of municipal bonds with the complete transparency and accessibility of an ETF.”
Credit analysis is critical in the municipal bond market. Unlike index funds that may rely solely on ratings agencies for credit analysis, PIMCO analyzes each municipality’s ability to pay obligations, collect taxes, benefit from federal stimulus and other factors, along with a detailed evaluation of each issue’s structure before a decision is made to purchase a security. In addition, the firm’s size, presence and relationships in municipal bond markets work to ensure institutional pricing and execution, which may not be directly accessible to an individual investor. Active management also allows PIMCO to focus on adjusting the portfolio as credit conditions change, and harvest losses in efforts to balance against future gains, further minimizing tax liabilities.
As with all of PIMCO’s ETF offerings, MUNI is part of an effort to broaden access to PIMCO’s investment process, market expertise and risk management by offering strategies and vehicles that appeal to a wide range of investor preferences while also complementing the firm’s other offerings.
PIMCO, founded in 1971, is a global asset management firm that manages investments for an array of clients, including retirement and other assets that reach more than 8 million people in the U.S. and millions more around the world. Our clients include state, municipal and union pension and retirement plans whose beneficiaries come from all walks of life, from educators to healthcare workers to public safety employees. We have a substantial individual investor client base, and work in partnership with financial intermediaries such as Registered Investment Advisors, broker/dealers, trust banks and insurance companies. We are also advisors and asset managers to central banks, corporations, universities, foundations and endowments. With offices in North America, Europe, Asia and Australia, we manage investments across a full spectrum of global financial markets. 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.
Shares of the fund are not individually redeemable and shares may only be acquired from and redeemed by the fund in Creation Units. Investors may sell or purchase individual shares in secondary market transactions that do not involve the ETF. Shares of the Funds are bought and sold at market price (not NAV). Brokerage commissions will reduce returns. Brokerage commissions will reduce returns. Investment policies, management fees and other information can be found in the individual ETF’s prospectus. The market price is determined using the midpoint between the highest bid and the lowest offer on the listing exchange, as of the time that the Fund’s NAV is calculated. Investment return, price, yield, and NAV will fluctuate with changes in market conditions. Investments may be worth more or less than the original cost when redeemed.
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. 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 ensure against loss. Please consult your tax and/or legal counsel for specific tax questions and concerns.
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. The credit quality of a particular security or group of securities does not ensure the stability or safety of the overall portfolio.
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.
The press release 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.
Pacific Investment Management Company LLC. ©2009, PIMCO.
ETF Shares are distributed by Allianz Global Investors Distributors LLC, 840 Newport Center
Drive, Newport Beach, CA, 92660 888-400-4ETF.
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