PIMCO Global Diversified Allocation
Historical Performance
Objective And Strategy
ObjectiveTo maximize risk-adjusted total return relative to a blend of 60% MSCI World Index/40% Barclays Capital U.S. Aggregate Index.
Strategy
The Portfolio is designed to be a comprehensive asset allocation solution that combines PIMCO’s views across global asset classes with dynamic risk management. The Portfolio invests primarily in PIMCO funds spanning global stocks and bonds. These funds are generally actively managed based on PIMCO’s macroeconomic views as well as bottom-up security analysis conducted by our research teams. The Portfolio is a strategic asset allocation portfolio, which means that the Portfolio Managers do not frequently change the allocation across asset classes. However, they do dynamically adjust the Portfolio's equity exposure in response to market volatility. The equity exposure in the Portfolio may range between 15% and 80% over a full business cycle. The Portfolio also incorporates tail risk hedges in efforts to mitigate the impact of severe market shocks.
Principle Risks
* This portfolio invests in securities of foreign issuers which involves risks not typically associated with domestic issuers, including currency fluctuations and the possibility of political and economic instability. Emerging markets involve risks in addition to those generally associated with foreign securities, because political and economic structures in many emerging markets may be undergoing significant evolution and rapid development.
* This portfolio invests (or may invest) in securities of companies with micro-, small-, or mid-capitalization. Any investment in micro-, small-, or mid-capitalization companies involves greater risk than that customarily associated with investments in larger, more established companies because of the greater business risks of smaller size, limited markets and financial resources, narrower product lines, and frequent lack of management depth. As such, micro- or small-cap companies may be more subject to erratic and abrupt market movements than securities of larger, more established companies.
* This portfolio can leverage or use leveraged instruments or derivatives. Portfolios that use leverage, that is, borrow money, are subject to the risk that the cost of borrowing money to leverage will exceed the returns for the securities purchased or that the securities purchased may actually go down in value. Thus the portfolio's net asset value can decrease more quickly than if the portfolio had not borrowed. Portfolios that use leveraged instruments or derivatives such as futures, options and swap agreements, may expose the portfolio to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The more a portfolio invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments.
* The portfolio invests substantial assets in real estate investment trusts (REITS) that present risks not associated with investing in stock.
* The portfolio's exposure to the US Dollar Index and/or foreign currencies subjects the portfolio to the risk that foreign currencies will fluctuate in value relative to the US Dollar or, in the case of short position, that the US Dollar will decline in value to the currency being hedged. Currency rates in foreign countries may move significantly over short periods of time for a number of reasons including changes in interest rates, the imposition of currency controls or other political developments in the US or abroad.
* This Fund may invest in publicly issued equity securities, including common stocks. Investments in common stocks are subject to market risks that may cause their prices to fluctuate over time.
* Fixed income securities are subject to interest rate risk because the prices of fixed income securities tend to move in the opposite direction of interest rates. When interest rates rise, fixed income security prices fall. When interest rates fall, fixed income security prices rise.
* Credit risk is the risk that the issuer of a security may be unable to make interest payments and/or repay principal when due. A downgrade to an issuer’s credit rating or a perceived change in an issuer’s financial strength may affect a security’s value, and thus, impact the VA Short-Term Fixed Portfolio’s performance.
* Mortgage-backed securities may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The underlying assets may default or decline in quality or value.
* Sovereign debt securities are subject to the risk that a government entity may delay or refuse to pay interest or repay principal on its sovereign debt.
* Distressed securities are speculative and involve substantial risks in addition to the risks of investing in junk bonds.
* The value of a specific security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The value of securities of smaller issuers can be more volatile than those of larger issuers. The value of certain types of securities can be more volatile due to increased sensitivity to adverse issuer, political, regulatory, market, or economic developments.
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Tactical Allocation04/2012
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Documents
- Fund Prospectus and Other Forms