ii ACE 40 investments:
PIMCO GIS Global Bond ESG Fund

Why we recommend it

Andrew Balls has led this sustainability-focused variant of Pimco’s Global Bond strategy since it launched in early 2017, and its sister strategy since 2014. Balls joined PIMCO in 2006 and has a good deal of experience running global and European bond mandates. He is directly supported by Lorenzo Pagani who heads the European government bond and rates team and Sachin Gupta a credit and interest rate derivatives specialist. They are backed by significant analytical resources available to them at PIMCO including PMs, credit analysts and ESG specialists.   

The fund seeks to outperform the Bloomberg Barclays Global Aggregate benchmark using an approach that allows for considerable flexibility. PIMCO’s top-down views guide the fund’s decisions and within the scope of these themes the managers will consider relative valuations to determine sector, country and yield curve positioning. In terms of duration, country, and sector bets, the risks taken in this strategy are similar to those of its non-ESG Global Bond sibling. The credit sleeve is where more differences are visible; much more is held in green and sustainable development goal linked bonds here, while heavily carbon-intensive industries are avoided. The firm’s ESG credit overlay also favours green bonds, issuers with smaller carbon footprints, and those that score well on a handful of other ESG metrics.  

Historically the strategy portfolio’s interest-rate duration has generally stayed within a two year band of the index’s duration and has held up to half of its assets in corporate bonds, and up to a third in emerging-markets debt; but it can also invest up to 10% in below-investment-grade bonds.

The fund benefits from the managers’ significant experience, the stability of the key contributors, and broad support from across Pimco’s organization. Pimco GIS ESG Global Bond has built a solid record since its 2017 inception, broadly mirroring the performance pattern of its more-established, non-ESG sibling.

The fund is a superior choice for implementing environmental, social, and governance principles into a globally diversified bond portfolio.

Experienced investment manager: PIMCO is one of the world’s leading fixed income investment managers. The fund is managed by a team led by Andrew Balls, Managing Director and Chief Investment Officer of Global Fixed Income at PIMCO.

Core global bond strategy with a positive environmental and social impact: The fund is a diverse, actively managed portfolio of global fixed-income securities, selected according to PIMCO’s internal ESG screening process. It seeks to maximise total return, consistent with preservation of capital and prudent investment management and is benchmarked against the Bloomberg Barclays Global Aggregate (GBP Hedged) index.

Currency-neutral: Because foreign currency exposure is neutralised by hedging, there is no risk from adverse currency exchange movements for sterling-based investors.

The fund is competitively priced: The ‘GBP Hedged’ accumulation share class levies annual ongoing charges of 0.52%.

Sustainability criteria

Morningstar Sustainable Attribute: This fund is considered a sustainable investment product based on its prospectus or other regulatory filings. As a General ESG Investment, the fund uses ESG criteria as a central part of the security-selection and portfolio-construction process. These strategies endeavour to promote sustainability and minimize negative impact, without focusing on a specific theme or area of action.