PIMCO Emerging Markets Short-Term Local Currency Fund

Investment rationale

The fund is designed to maximise total return through income and capital growth by investing in emerging markets short-term local currency fixed income and currencies. It is a UCITS fund with a summary risk indicator of 3 out of 7 and a recommended holding period of 3 years. The intended retail investor is someone seeking diversified exposure to fixed income markets economically tied to emerging market countries, willing to accept the risks and volatility of those markets, and investing over the medium to long term. Based on its specific focus on emerging market local currencies, short duration and high interest rate exposure, it is a distinct specialist allocation rather than a broad developed-market bond holding.

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How the strategy works

The fund aims to maximise total return using prudent investment management principles by investing primarily in a range of currencies and fixed income securities and instruments issued by governments and companies from emerging markets around the world. It invests at least 80% of assets in currencies and short-duration bonds denominated in developing-country currencies. Under normal market conditions, average portfolio duration is not expected to exceed two years; at 31 August 2026, effective duration was 0.53 years and effective maturity was 0.97 years. Securities may be investment grade and non-investment grade, and the fund may invest directly in currencies or bonds or use derivatives such as futures, options and swaps to replicate or gain exposure to underlying assets. It is actively managed in reference to the J.P. Morgan Emerging Local Markets Index Plus (Unhedged) / ELMI+, which is used for performance comparison and for calculating global exposure using relative VaR, but not to define portfolio composition or as a performance target. This E Class USD Accumulation share class does not distribute income, and any investment income is reinvested.

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Investment philosophy

• The fund invests primarily across emerging market currencies and fixed income securities issued by governments and companies around the world, with a focus on developing-country local-currency exposure and at least 80% of assets in currencies and short-duration bonds denominated in those currencies.

• Portfolio construction is short duration by design: average portfolio duration is not expected to exceed two years under normal market conditions, and at 31 August 2026 effective duration was 0.53 years and effective maturity was 0.97 years.

• The investment universe includes both investment grade and non-investment grade securities, and implementation can be through direct holdings or derivatives including futures, options and swaps; the fund may also use derivatives to replicate investment returns.

• The benchmark is the J.P. Morgan Emerging Local Markets Index Plus (Unhedged) / ELMI+, used for performance comparison and relative VaR exposure measurement, but not to set portfolio composition; the fund may be wholly invested in securities outside the index.

• At 31 August 2026, sector allocation included 52.5% in net other short duration instruments and 44.1% in emerging markets; the largest currency exposures included South Korea, Mexico, India, Taiwan, Singapore and Brazil. The top-holdings list, dated 30 June 2026 and excluding derivatives, included South African T-Bills, Malaysia Investment Issue, Republic of South Africa, Malaysia Government, Titulos de Tesoreria and China Development Bank.

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Management team

The portfolio managers are Pramol Dhawan and Michael Davidson.

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Distinctive features

The fund offers targeted access to emerging market local currencies and short-duration local debt, with PIMCO highlighting exposure to high interest rates in emerging market countries and low correlation to developed markets fixed income. PIMCO seeks to provide efficient exposure to fast-growing emerging markets while leveraging its disciplined investment process and expertise in local market inefficiencies to overcome complex investment entry barriers. Its short-duration profile differentiates it from broader emerging market bond funds with longer rate sensitivity. The structure also allows implementation through both cash instruments and derivatives across currencies and bonds.

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Risks

The fund has a summary risk indicator of 3 out of 7, a medium-low risk class, and risk can vary significantly if investors exit early. Risks include credit and default risk, currency risk, derivatives and counterparty risk, emerging markets risk, liquidity risk, interest rate risk, mortgage-related and other asset-backed securities risk, and specific China InterBank Bond Market risks including settlement, counterparty default and rule-change risk. These risks are driven by the fund’s investments in emerging market local-currency securities and currencies, its ability to hold both investment grade and non-investment grade debt, and its use of derivatives such as futures, options and swaps. The fund is an Article 6 fund: it does not have sustainable investment as its objective and does not promote environmental or social characteristics, although sustainability risks are integrated into the investment policy.

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Asset manager

The management company is PIMCO Global Advisors (Ireland) Limited, a member of the PIMCO group. The investment advisor is PIMCO LLC. The product is a sub-fund of PIMCO Funds: Global Investors Series plc, an Irish-domiciled UCITS umbrella with segregated liability between funds.

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