PIMCO Advantage US Low Duration Corporate Bond UCITS ETF

Investment rationale

This fund is a low-risk fixed income ETF designed to maximise total return while remaining consistent with prudent investment management. It is intended for investors seeking a basic fixed income allocation with less risk and volatility than a full maturity strategy, and the recommended holding period is 3 years. With a summary risk indicator of 2 out of 7 and a focus on low duration US investment grade corporate bonds, it can serve as a core short-duration credit holding within a portfolio. Its distinct profile comes from its active management, US dollar-denominated investment grade corporate bond focus, and target of keeping average portfolio duration within +/- 1 year of the ICE BofA US Corporate Bond 1-5 Year Index.

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How the strategy works

The fund aims to maximise total return, consistent with prudent investment management. Under normal circumstances it invests at least 80% of assets in an actively managed diversified portfolio of USD-denominated investment grade corporate fixed income instruments, while allowing up to 5% of net asset value in non-investment grade securities. It may invest in emerging markets, hold non-USD denominated fixed income instruments and currency positions, and use derivatives such as futures, options and swaps; the average portfolio duration will normally remain within +/- 1 year of the ICE BofA US Corporate Bond 1-5 Year Index. The fund is actively managed in reference to that index for performance comparison, duration measurement and relative VaR global exposure calculations, and the USD Income share class distributes income quarterly; the recommended holding period is 3 years.

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Investment philosophy

• The portfolio is built primarily from USD-denominated investment grade corporate fixed income instruments, with at least 80% of assets invested in this universe under normal circumstances and up to 5% of net asset value allowed in non-investment grade securities.

• PIMCO states that it applies its total return investment process and philosophy using both top-down and bottom-up strategies to identify multiple diversified sources of value and assess relative value across market environments.

• The fund may also invest in emerging markets, non-USD denominated fixed income instruments and currency positions, and may gain exposure through derivatives including futures, options and swaps rather than only through cash securities.

• Duration is a key portfolio control: average portfolio duration will normally remain within +/- 1 year of the ICE BofA US Corporate Bond 1-5 Year Index, and the fund is managed with low expected deviation from the index and low anticipated volatility of active return differences.

• At 31 August 2026, portfolio positioning was concentrated in investment grade credit at 58% of market value, with 66% of market value in 3-5 year maturities and 54% of duration-weighted exposure in the 3-5 year bucket; top industry exposures include banks, other financials, technology and utilities, while the largest duration contribution comes from the United States.

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Management team

The named portfolio managers are Amit Arora, Jelle Brons and Saurabh Sud. They were the portfolio management team for the fund at 31 August 2026.

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Distinctive features

The fund combines an active ETF structure with a specialised focus on US low duration investment grade corporate bonds. PIMCO believes low duration US credit offers enhanced yield potential versus short-dated government bonds with similar drawdown risk, and attractive risk-adjusted returns compared with the full maturity credit market over the long term. The vehicle carries a unified management fee of 0.25% per annum and distributes income quarterly. It is also categorised under SFDR Article 8 and promotes environmental and social characteristics through an exclusion strategy.

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Risks

The fund has a risk indicator of 2 out of 7, indicating a relatively low risk class, but it does not include protection from future market performance and investors could lose some or all of their investment. Credit and default risk, interest rate risk and liquidity risk are key risks, which are directly linked to its corporate bond portfolio and fixed income duration exposure. Currency risk is also relevant because the fund may hold non-USD fixed income instruments and currency positions, and investors may receive payments in a different currency. Additional risks include derivatives and counterparty risk, emerging markets risk, mortgage-related and other asset-backed securities risks, and ESG strategy risk, since ESG integration and exclusions may alter sector or investment exposure and cause performance to differ from similar funds that do not use such a strategy.

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Asset manager

The management company is PIMCO Global Advisors (Ireland) Limited and the investment advisor is PIMCO LLC. PIMCO Global Advisors (Ireland) Limited is a member of the PIMCO group and is authorised in Ireland and regulated by the Central Bank of Ireland. The fund is domiciled in Ireland as a UCITS sub-fund of PIMCO ETFs plc.

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