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Fund Fact Sheet Quarterly Investment Report Product Disclosure Statement (AU)

Capital Securities Fund

ETL0445AU

Updated 18 April 2024

Fund Fact Sheet Quarterly Investment Report Product Disclosure Statement (AU)

Objective

To seek to provide focused exposure to attractively priced Capital Securities together with a maximum total return, consistent with the preservation of capital and prudent investment management.

Investments Held

Predominantly invests both directly and indirectly (via other funds) in subordinated debt instruments issued by banks, insurance companies, and other specialty finance companies.

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Overview

Fund Overview

Capitalising on a global de-leveraging and re-regulation trend

The Capital Securities Fund is a global approach to subordinated debt instruments issued by banks, insurance companies and other specialty finance companies. As the global banking sector continues a multi-year process of deleveraging, the market environment remains conducive to the appreciation of these securities.

Why Invest In This Fund

Diversifying Australian bank exposure

The global banking industry is undergoing a generational paradigm shift, and the latest developments on Australian banks’ capital adequacy requirements from the Australian Prudential Regulation Authority (APRA) are an unequivocal sign this shift has reached Australian shores. Capital securities offers an opportunity for investors to diversify their concentrated Australian bank exposure by harnessing a diversified global opportunity set.

A compelling opportunity set

Capital securities issued by global financial companies can be an attractive opportunity relative to both high yield bonds and equities. PIMCO believes the strong fundamentals of the banking system, the influence of regulation, and compelling valuations are supportive of attractive long-term total returns within the sector.

A high conviction portfolio

The Fund is managed on an unconstrained basis. The absence of a typical fixed income benchmark emphasises the exposure to PIMCO’s highest conviction ideas within the global financial sector. This highly-focused, “top picks” approach allows PIMCO to allocate across the capital structure based on PIMCO’s assessment of relative value and avoid undesired exposure to banks which could lose capital value.

Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates.

Our Expertise

Deep dedicated team of financial sector experts

PIMCO’s time-tested investment process combines macroeconomic analysis with extensive bottom-up security selection. The fund’s dedicated global financial sector team employs proprietary credit research to identify the strongest conviction financial securities across the capital structure globally.

PRIMARY BENCHMARK

Bloomberg AusBond Bank Bills Index

PRIMARY BENCHMARK DESCRIPTION

The Bloomberg AusBond Bank Bills Index is an unmanaged index representative of the total return performance of Australian money market securities. It is not possible to invest in an unmanaged index.

DISTRIBUTION FREQUENCY

Quarterly

SHARE CLASS INCEPTION

11/08/2015

APIR Code

ETL0445AU

mFund Code

PMF07

Currency

AUD

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How to Invest

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Managers

Philippe Bodereau

Portfolio Manager, Head, Credit Research Europe

View Profile for Philippe Bodereau

Matthieu Loriferne

Portfolio Manager, Capital Securities and Financials

View Profile for Matthieu Loriferne

Michael Bogecho

Portfolio Manager, Capital Securities and Financials

View Profile for Michael Bogecho

Yields & Distributions

Historical Prices & Distributions

Latest Dividend Distribution ($ Share)1 as of 31/03/2023 $0.01086
Dividend Distribution (FYTD) as of 31/03/2023 $0.03339

disclosures

1The Fund generally distributes income quarterly at the end of March, June, September and December.

Fees & Expenses

Total Annual Management Fee %2 0.94%

disclosures

2Management fees quoted are inclusive of Goods and Services Tax (GST) and net of any Reduced Input Tax Credits (RITC) at the prescribed rate, which is currently either 55% or 75% (depending on the nature of the fee or expense).
In addition to the Management Fee there may be other fees and costs associated with an investment in this fund. For a detailed explanation on fees and costs please refer to the Product Disclosure Statement

Performance

All data as of

All data as of

Click here to view the Price and Performance for all Australia

Past performance is not a reliable indicator of future results. Fund performance is quoted net of fees and expenses and assumes the reinvestment of all distributions but does not take into account personal income tax.

Fiscal Year Returns %

All data as of

Growth of $10,000 (hypothetical)

Morningstar and Lipper

disclosures

Performance figures presented reflect the total return performance after fees and reflect changes in share price and reinvestment of dividend and capital gain distributions on the payable date. All periods longer than one year are annualized.
Monthly YTD return is from the most recent calendar year end.
Growth of $10,000 is calculated at NAV and assumes that all distributions were reinvested. It does not take into account fees or the effect of taxes. Results are not indicative of future performance.

Portfolio Composition

All data as of unless otherwise stated

Duration %

0-1 yrs 0.86
1-3 yrs 19.43
3-5 yrs 27.81
5-7 yrs 39.49
7-8 yrs -4.82
8-10 yrs 5.62
10+ yrs 11.60
Effective Duration (yrs) 3.70

Region - Duration in Years

North America 2.38
Europe - EMU 1.03
United Kingdom 0.21
Australia/NZ 0.09
Emerging Markets 0.00
Europe - Non-EMU 0.00
Japan 0.00
Other 0.00

Currency Exposure %

Australia/NZ 99.76
North America 0.25
Europe - Non-EMU -0.01
Japan 0.01
Europe - EMU -0.01
United Kingdom 0.00
Emerging Markets 0.00
Other 0.00

Strategy Allocation Market Value %

Senior 8.93
Tier 2 8.44
Tier 2 CoCo 1.39
Tier 1 & Preferred 6.10
Additional Tier 1 63.82
Equity 0.00
Bank Loans 0.00
Non-Financials 13.78
Net Short Duration Instruments -2.45

disclosures

Portfolio information in the charts is based on the fund's net assets. These percentages may differ from those used for the fund's compliance calculations, including the fund's prospectus, regulatory, and other investment limitations and policies, which may be based on total assets of the fund or other measurements, may include or exclude various categories of investments from those covered in the portfolio allocation categories shown in this report, and may be based on different classifications and measurements of the fund’s investments and other criteria.
References to specific sectors, securities or issuers are for illustrative purposes only. All holdings are subject to change daily. All share classes have the same portfolio but different expenses.

Documents

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RELATED

PIMCO Capital Securities Talk Track

A succinct guide covering reasons to invest, role in a portfolio and the key characteristics of the fund.

Disclosures

Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. Before making an investment decision investors should consider whether the information contained herein is appropriate in light of their particular investment needs, objectives and financial circumstances and any relevant offer document. Investors should obtain relevant and specific professional advice before making any investment decision. The information contained herein does not take into account the investment objectives, financial situation or needs of any particular investor.
A word about risk:

Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower’s obligation, or that such collateral could be liquidated. High yield, lower-rated securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Investments in illiquid securities may reduce the returns of a portfolio because it may be not be able to sell the securities at an advantageous time or price. Equities may decline in value due to both real and perceived general market, economic and industry conditions. 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.

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. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.