Jamie Weinstein: It's certainly not an easy market right now across the credit spectrum. But that being said, there are some pockets of opportunity in the market today.
I'm Jamie Weinstein. And I am responsible for corporate opportunistic and special situations investing.
You've seen high quality credit tighten relative to where it started, 2019 in particular. And we've seen some of the lower quality stuff trade off.
And so there's been a bigger gap in spreads and yields between the two. And that movement has created some opportunities in some of those lower rated securities.
We are very focused right now on some of the cracks that have emerged in the corporate credit market in particular.
As a firm overall, we've been relatively cautious in corporate credit positioning across the entire platform and different types of portfolios that we run. And we're gearing up for what we think could be a much more interesting market over the next 12 to 24 months.
PIMCO has been investing in alternatives for over a decade.
We have developed pretty exceptional risk management techniques and tools and systems, whereby we can apply the knowledge that we built over a number of years to all different kinds of portfolios.
And I think this is a differentiated capability for PIMCO particularly relative to the alternative universe in the less liquid part of the market.
And we're actively investing in companies across the entire spectrum of fixed income. So we see a lot, we're involved in a lot, and we can leverage the intellectual capital to create what we think are differentiated views on companies that we can express in differentiated types of investments.
Every investor at PIMCO, every portfolio manager is well aware of the firm's overall macro framework, and how it can be applied in different portfolio contexts.
And we can apply that knowledge and leverage it in terms of how we express themes, and how we diligence specific securities.
One of the important things that I think is a differentiator for PIMCO in the alternative credit space and the alternative asset space, is the ability to generate scale in the investments that we make, and leverage the scale of the firm broadly to create differentiated solutions for companies or borrowers who need capital in certain forms.
Whether it's a public security that needs to get created in order to solve a problem for a borrower, or it's a more private solution in a highly customized firm, PIMCO's breadth and depth of resources both intellectual and financial, I think is relatively unique in the market that we're in.
We think we are extremely well positioned to take advantage of the capabilities of the firm, built over a long history of investing in fixed income and credit, and leverage that into greater opportunities for our clients over time. And I'm excited to be a part of it.
All investments contain risk and may lose value. Alternative investments involve a high degree of risk and can be illiquid due to restrictions on transfer and lack of a secondary trading market. They can be highly leveraged, speculative and volatile, and an investor could lose all or a substantial amount of an investment. Alternative investments may lack transparency as to share price, valuation and portfolio holdings. Complex tax structures often result in delayed tax reporting. Compared to mutual funds, private funds are subject to less regulation and often charge higher fees. Alternative investment managers typically exercise broad investment discretion and may apply similar strategies across multiple investment vehicles, resulting in less diversification. Trading may occur outside the United States which may pose greater risks than trading on U.S. exchanges and in U.S. markets.
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 low interest rate environments increase this risk. 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. 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. Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to factors such as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. Management risk is the risk that the investment techniques and risk analyses applied by PIMCO will not produce the desired results, and that certain policies or developments may affect the investment techniques available to PIMCO in connection with managing a strategy.
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