Press Release

PIMCO Launches Capital Securities Fund in Australia


Sydney, Australia (September 28, 2015) – PIMCO, a leading global investment management firm, has launched the PIMCO Capital Securities Fund into the Australian marketplace. The fund aims to help Australian investors to diversify their exposure to Australian financials by offering a global opportunity set of PIMCO’s top global financial ideas without the constraints of an index. The fund is designed for an investor’s higher-risk fixed income allocation, and it may act as​ an attractive alternative to Australian bank hybrids, traditional high yield bonds or equities, while enhancing overall portfolio diversification. The fund may improve the risk-adjusted return characteristics of an investment portfolio with high exposure to Australia’s major banks, especially at a time when Australia’s banking sector has increasing exposure to the domestic property market.1

The Australian launch follows the successful launch of similar strategies offshore that have raised over US$5.6 billion (as at 31 August 2015) since it was designed in London 2011 to capitalise on the de-leveraging and re-regulation trend across the financial sector. PIMCO believes there are compelling opportunities in bank securities that sit lower in the capital structure due to the multi-year deleveraging in the global banking sectors and the stricter capital requirements imposed by regulators on large global financial institutions.

Philippe Bodereau, Managing Director and Portfolio Manager of the PIMCO Capital Securities Fund based in London said, “Many Western banks are now operating at record high levels of capital and these improving fundamentals are positive for capital securities.” Mr. Bodereau adds, “The securities also offer relatively higher premiums, due in part to regulatory-influenced supply, and tend to have a low or negative correlation with interest rates. If rates should rise, capital securities are likely to perform better than other parts of the fixed-income markets.”

The fund benefits from PIMCO’s time-tested investment process and substantial global credit capabilities, which includes more than 60 seasoned credit analysts located across PIMCO’s network of global offices, with nine focused exclusively on financials. The fund offers investors a long-term, strategic allocation to the global financial sector through investments primarily in subordinated and contingent convertible bonds (CoCos), including Additional Tier 1 (AT1) bonds, which are part of new capital requirements by Basel III. It offers embedded flexibility to allocate across the capital structure, ranging from senior bonds and Tier 1 bonds to CoCos and even equities, based on PIMCO’s assessment of risks and relative value.

Adrian Stewart, Head of PIMCO Australia, comments, “The global banking industry is undergoing a generational paradigm shift and the latest developments on Australian banks’ capital adequacy requirements from APRA is a clear sign that this shift has reached Australia. As a consequence, the underlying exposure for investors in Australia’s major banks is becoming increasingly homogenous and concentrated in domestic residential property.”

“Given Australian investors’ significant exposure to the major banks, we believe PIMCO Capital Securities Fund offers a compelling opportunity for Australian investors to diversify their concentrated domestic bank exposure, mainly in Australian bank equities and hybrid securities, by harnessing a diversified global opportunity set.” Mr. Stewart added, “The launch of the fund underscores PIMCO’s commitment to the Australian market and our ability to respond effectively to local market demands.”

Media Contacts

Michael Reid
Global Head of Corporate Communications
New York

Donna Chan
APAC Corporate Communications
Hong Kong

Millie Dravers
Australia Corporate Communications

Agnes Crane
U.S. Corporate Communications
New York

Jennifer Spivey
U.S. Corporate Communications
Newport Beach

Laura Batty
U.K. and EMEA Corporate Communications

Jochen Haegele
EMEA Corporate Communications


[1] For an explanation of our methodology and findings on the suitability of PIMCO’s Capital Securities Fund, see our September 2015 paper, “For Australian Bank Investors, Capital Securities Offer Diversification

PIMCO is a leading global investment m​anagement firm, with 13 offices in 12 countries throughout North and South America, Europe and Asia. Founded in 1971, PIMCO offers a wide range of innovative solutions to help millions of investors worldwide meet their needs. Our goal is to provide attractive returns while maintaining a strong culture of risk management and long-term discipline. PIMCO is owned by Allianz S.E., a leading global diversified financial services provider.

Past performance is not a reliable indicator of future results PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246862 (PIMCO Australia) offers products and services to both wholesale and retail clients as defined in the Corporations Act 2001 (limited to general financial product advice in the case of retail clients). This communication is provided for general information only without taking into account the objectives, financial situation or needs of any particular investors. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world. © 2015 PIMCO