Pimco creates fund focused on long-dated investment grade bonds

By Devika Patel

Knoxville, Tenn., Dec. 10 - Pimco said in a press release that it has launched an actively managed portfolio that aims to take advantage of opportunities in long-dated investment-grade corporate bonds.

The Long-Term Credit Fund is managed by Mark Kiesel, managing director and global head of Pimco's corporate bond portfolio management group. Its ticker symbol will be PTCIX.

The fund is designed to offer investors a way to benefit from the attractive yields available on longer-dated corporate debt. It also offers liability-driven investing, or LDI, for pension plans, insurance companies and other investors that are engaged in efforts to better match their assets to their long-term obligations.

LDI has seen rapid adoption by investors with long-term obligations, particularly pension funds, where sensitivity to interest rate risk (duration) and credit risk (spreads) are key factors that determine the ability to meet future liabilities.

The duration and credit spreads of long-term corporate bonds may make them an appropriate LDI solution, and may benefit other investors who have a long investment horizon and lower tolerance for equity market volatility and risk.

"The Long-Term Credit Fund aims to give investors appropriate access to corporate bond yields that are currently at or near historic highs. Actively and prudently managed long-term credit can also potentially offer lower volatility than equities and attractive income," the fund's portfolio manager Mark Kiesel said in the release. "The extreme volatility in equities and other investments resulting from the financial crisis has left many investors unprepared to meet their goals, and highlights the need for a closer assessment of high-quality long-dated corporate bonds in a portfolio."

Pimco is a fixed-income fund-management company based in Newport Beach.

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