PIMCO Capital Securities Fund

Investment rationale

The fund is designed to maximise total return through exposure to capital securities, and it gives focused access to subordinated debt and related instruments issued mainly by financial institutions. It is intended for investors seeking exposure to capital securities who are willing to accept the risks and volatility of global fixed income markets and who have a medium- to long-term horizon; the recommended holding period is 3 years. The summary risk indicator is 3 out of 7, and the fund’s distinct role is as a more specialised allocation to higher-yielding bank, insurance and specialty finance capital instruments rather than a broad aggregate bond holding. Its emphasis on Tier 1, Tier 2 and contingent convertible bonds makes it a targeted way to access the financial sector capital structure.

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How the strategy works

The fund aims to maximise total return using prudent investment management principles while seeking exposure to attractively priced capital securities. It invests at least 80% of assets in a global portfolio of capital securities, including fixed income securities, contingent convertible bonds and equities issued by financial institutions such as banks and insurance companies; securities may be both investment grade and non-investment grade. Most investments are concentrated in Tier 1, Tier 2 and CoCo bonds, while maintaining flexibility to invest across the capital structure, and the average portfolio duration will normally vary between three and seven years. The fund references the ICE BofA SOFR Overnight Rate Index for performance comparison only; it is actively managed, the benchmark does not define portfolio composition and is not a performance target. The fund may use derivatives such as futures, options and swaps, may use foreign exchange and related derivatives to hedge or implement currency positions, can normally be redeemed daily, and the E Class USD Accumulation share class reinvests income rather than paying distributions.

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Investment philosophy

• The portfolio is built primarily from subordinated debt instruments issued by banks, insurance companies and other specialty finance companies, with at least 80% of assets invested in global capital securities.

• The approach combines macroeconomic analysis with bottom-up security selection to identify highest-conviction financial issues without being tied to a capital securities benchmark.

• The fund concentrates mainly in Tier 1, Tier 2 and contingent convertible bonds, but retains flexibility to allocate across the capital structure based on relative value; positioning at 31 August 2026 includes exposure to Additional Tier 1, Tier 1 & Preferred, and Tier 2 instruments.

• Sector exposure at 31 August 2026 was heavily oriented to financial issuers, with market-value exposure shown across banking, insurance and finance corporations, alongside government and non-financial positions and net short duration instruments.

• The top corporate holdings at 30 June 2026 include issues from Crédit Agricole, Lloyds Banking Group, Nationwide Building Society, Rabobank, CaixaBank, NatWest, Deutsche Bank, Banco Santander and Intesa Sanpaolo, while the largest country exposures at 31 August 2026 include the United States, United Kingdom, Italy, France, the Netherlands and Spain.

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Management team

The portfolio managers are Philippe Bodereau, Matthieu Loriferne, Michael Bogecho and Eusta Qin.

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Distinctive features

The fund offers a specialised, actively managed way to access higher-yielding capital securities issued by financial institutions. PIMCO dedicates proprietary credit research and specialist traders to this market segment, which supports issuer and security selection in a sector that includes subordinated and contingent convertible instruments. The strategy is also flexible across the capital structure rather than being constrained to a benchmark allocation, and it combines global issuer exposure with a duration range that is normally maintained between three and seven years. The E share class has a unified management fee of 1.69% per annum.

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Risks

The fund has a summary risk indicator of 3 out of 7, a medium-low risk class, and a recommended holding period of 3 years. Specific risks include credit and default risk, interest rate risk, liquidity risk, currency risk, derivatives and counterparty risk, and risks tied to contingent convertible securities, including equity conversion and principal write-down features. These risks are driven by the fund’s focus on subordinated financial debt, including Tier 1, Tier 2 and CoCo bonds, its ability to invest in both investment grade and non-investment grade securities, and its use of derivatives and foreign exchange instruments. The ESG investing strategy may also select or exclude issuers for reasons other than financial performance, which can affect sector or investment-type exposure, and future ESG regulation may influence implementation.

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Asset manager

The management company is PIMCO Global Advisors (Ireland) Limited, and the investment advisor is PIMCO Europe Ltd. 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 vehicle is PIMCO Funds: Global Investors Series plc, a UCITS fund domiciled in Ireland. Total net assets were USD 5.7 billion at 31 August 2026.

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