PIMCO has launched the PIMCO Flexible Credit Income Fund, an interval fund that aims to generate attractive risk-adjusted returns and current income by investing across global credit sectors, including consumer, corporate, emerging market, mortgage and municipal bonds.
The fund will be managed by a team of portfolio managers based in Newport Beach, New York and London.
The interval fund structure combines certain attributes of a closed end fund and a traditional mutual fund. As an unlisted closed-end fund, it looks to provide greater flexibility in targeting potentially higher returning, less liquid assets while offering the fund enhanced liquidity protection* should markets become stressed. The fund has greater flexibility to invest in illiquid securities and assets than open-end mutual funds.
Similar to a mutual fund, the fund is continuously offered. Additionally, investors can sell their shares back to the fund, although unlike the daily liquidity of a mutual fund, they may only be able to do so on a quarterly basis through repurchase offers (currently expected to be at 5 per cent of outstanding shares).
“In a low yielding environment, it is increasingly important to have the flexibility and resources to invest in both the public and private credit markets,” says Alfred Murata, managing director and portfolio manager. “We believe the flexibility of an interval fund structure allows investors to seek to capitalise on dislocations across global credit markets while remaining flexible to better navigate periods of short-term volatility.”
The PIMCO Flexible Credit Income Fund is the firm’s first interval fund. The structure expands access to the flexible, opportunistic credit capabilities that PIMCO already deploys in its private credit vehicles.
Murata; Dan Ivascyn, managing director and group chief investment officer; Mark Kiesel, managing director and chief investment officer of global credit; Marc Seidner, managing director and chief investment officer of non-traditional strategies; Christian Stracke, managing director and global head of credit research; and Eve Tournier, executive vice president and head of European credit portfolio management, are jointly and primarily responsible for day-to-day management of the fund.