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Sustainable, Responsible and Impact Mutual Fund and ETF Chart

Jump to: General Fund Information | Fund Institution Information | Account Minimums | Methodology | Proxy Voting Information | Specific Screening Information by Category | Performance Data

General Fund Information - [Return to Top]

Ticker: PTSAX

Assets under management (AUM): $1926.11M (in US$ millions) - See other performance data below

General Fund Type: Bond (Fixed Income)

Specific Sizes or Types of Investments: N/A

Financial Objective: Total Return ESG is focused on maximizing total return potential while seeking capital preservation through prudent investment management.

Specific ESG Focus: Total Return ESG uses environmental-, social-, and governance-related (ESG) criteria to choose securities that comprise the fund and to proactively engage with issuers to realized ESG-related objectives. This includes restricting investments in issuers fundamentally misaligned with sustainability practices, by prospectus and practice, emphasizing best-in-class ESG issuers and prime ESG engagement candidates in portfolio construction, and engaging collaboratively with issuers to change ESG-related business practices.

To invest, call: 888.877.4626

Institution Name:
PIMCO

Contact info:
CA

Account Minimums - [Return to Top]

Minimum Account: $75mm for separate account; $1mm for fund

Minimum IRA: N/A

Methodology - [Return to Top]

Screening Venue: In-house

Screening Party: PIMCO

Screening Database Used: MSCI, Reprisk, CDP, TPI, Maplecroft, Freedom House, Trucost

Screening Process: We exclude issuers fundamentally misaligned with sustainability principles, including issuers focused on tobacco manufacturing, the production of controversial weapons, pornographic material and the production or distribution of coal. These core exclusions are supplemented by a dynamic list of issuers excluded due to business practices misaligned with ESG principles, a failure to demonstrate a willingness to improve practices or unresponsiveness to PIMCO’s active engagement efforts. Issuers of restricted securities are coded into our in-house compliance system, and portfolio managers, account managers, and our compliance teams closely monitor accounts to ensure compliance with applicable requirements. Issuers of restricted securities are coded into our in-house compliance system, and portfolio managers, account managers, and our compliance teams closely monitor accounts to ensure compliance with applicable requirements.

Proxy Voting Information - [Return to Top]

Proxy Voting Guidelines or Policies: Open external link in new window

Proxy Voting Records: • Information about how PIMCO voted a client’s proxies for the most recent twelve month period ended June 30th (Form N-PX) will be available no later than the following August 31st, without charge, on the Funds’ website at http://www.pimco.com and on the S

Specific Screening Information by Category - [Return to Top]

Environment

• Climate / Clean Technology: Combination of Positive and Restricted/Exclusionary Strategies - - PIMCO’s ESG investment criteria are aligned with our underlying/time-tested investment due diligence. ESG-related factors are considered alongside relative value and bottom-up credit views. Our approach is also dynamic in that for all our holdings, regardless of ESG credentials, we closely monitor ESG controversies and assess related potential credit risk implications. We seek positions in names in the context of: 1) Their ESG risk exposures to financially material ESG issues (e.g., carbon emissions, water stress, financial product safety, etc.); 2) Their corresponding ESG risk management practices (e.g., emissions reduction targets, board-level risk management structures, investment in renewables/clean tech, purpose bonds issuance, etc.); and 3) Their demonstrated ESG outperformance relative to peers (e.g., stronger-than-average emissions or water withdrawal intensity, beyond regulatory compliance risk management systems/asset integrity, SDG-aligned performance reporting, etc.). The ESG Funds will not invest in the securities of any issuer determined by the Investment Advisor to be engaged principally in the oil industry, including extraction, production, and refining; the production, distribution of coal and coal fired generation; but can invest in biofuel production, natural gas generation and sales and trading activities, as natural gas may be an important transition fuel for a low carbon economy. However, green / sustainable labelled Fixed Income Securities from issuers involved in fossil fuel-related sectors, as described above, may be permitted. Along with excluding worst-in-class issuers, the fund emphasizes best-in-class issuers, like those who have formal, ambitious climate strategies, are making measurable progress in reducing resource intensity and physical risks, or issues green bonds financing innovative clean technology or climate related projects.
• Pollution / Toxics: Combination of Positive and Restricted/Exclusionary Strategies - The ESG Funds will not invest in the securities of any issuer determined by the Investment Advisor to be engaged principally in the oil industry, including extraction, production, and refining; the production, distribution of coal and coal fired generation; but can invest in biofuel production, natural gas generation and sales and trading activities, as natural gas may be an important transition fuel for a low carbon economy. However, green / sustainable labeled Fixed Income Securities from issuers involved in fossil fuel-related sectors, as described above, may be permitted. In our credit research process, we positively view consumer companies’ circular economy commitments, built by corporate actions to lower dependence on single-use materials and support bolder recycling targets (e.g. fully recyclable content), or waste management companies that contemplate innovative solutions, such as plastics-to-biofuels projects. Key stumbling blocks include the competitiveness and sustainability of alternatives (e.g. bioplastics, paper-based packaging solutions or biodegradable solutions), as well as setting up the required recycling systems This topic has been raised by PIMCO Credit Analysts in a broader context, notably in relation to issuers’ circular economy strategies (e.g., with Food and Packaging companies). Our Analysts integrate into their assessments the long-term implications of the plastic industry transformation across the value chain. This includes spotting the likely winners and losers and flagging financial risks and opportunities.
• Other Environmental: Combination of Positive and Restricted/Exclusionary Strategies - In our ESG portfolios, PIMCO assesses many different environmental factors when evaluating companies or countries. While there is currently not enough quality data to evaluate and assess the quantity of waste and/or water produced to generate a certain amount of revenues at a portfolio level, they are nevertheless incorporate into our research process. Some of these considerations include factors surrounding waste and water, such as water intensity reduction, water withdrawals monitoring and reduction, and efficient use of resources and disposal of waste. Engagement – Environmental Themes In addition to our evaluation of companies’ waste and water production, we also engage with them on how to best reduce or better manage their waste. Below are a few key environmental themes and practices we have focused on in the last few years.  Environmental impact - Best practice is for companies to continually improve their performance in areas such as pollution control, recycling and reduction of toxic substances, including developing eco-friendly products and raising customer awareness. It adds value to certify the Environmental Management System (EMS) through an international standard such as ISO 14001.  Resource efficiency - As investors we seek companies that maximize operating profitability. Good resource management – from waste to energy consumption – reduces not just a firm’s pollution, but also its production costs. Our view is that resource efficiency is another indicator of superior management quality.  Water management - Depending on the company’s exposure to water-stressed areas, we look for evidence that it is tracking fresh water use and quality, is setting ambitious reduction and recycling targets, and managing any conflicts with local stakeholders concerning fresh water resources.

Social

• Community Development: Positive Investment - Through our MBS ESG scoring framework, we support homeownership and increase access for underserved communities. We also promote responsible lending and limit investment in predatory lending practices. Furthermore, when investing in municipals, we assess across a variety of community development aspects, such as affordable housing, wealth distribution, and affordable housing. We seek to invest in issuers that will help communities improve across these metrics or others, such as graduation rates or employment.
• Diversity & Equal Employment Opportunity: Combination of Positive and Restricted/Exclusionary Strategies - Diversity and inclusion is a key part of our ESG assessment and engagement. We look at levels of diversity across all levels of a firm, and monitor the trajectory. We analyze recruiting, training, and benefit policies to understand how they work to promote diversity. We look at employee experiences reported in employee review outlets such as Glassdoor, significant lawsuits, or strikes. This information is part of several material factors that go into the ‘Social’ rating of a company, and can also be part of engagement if we see a clear opportunity for a company to improve.
• Human Rights: Restricted/Exclusionary Investment - This Fund excludes issuers in violation of UN Global Compact Principles, UN Guiding Principles of Business and Human Rights, or International Labour Organization Conventions.
• Labor Relations: Restricted/Exclusionary Investment - This Fund measures company commitment to transparency, labor & human rights and environmental sustainability in the supply chain with a focus on Modern Slavery, Water & Land Use and Deforestation
• Conflict Risk: Restricted/Exclusionary Investment - This Fund excludes sovereigns in the bottom 15% of transparency and corruption indices including Transparency International, World Bank, and Freedom House. Also excludes issuers in violation of UN Global Compact Principles, UN Guiding Principles of Business and Human Rights, or International Labour Organization Conventions.

Governance

• Board Issues: Combination of Positive and Restricted/Exclusionary Strategies - During our evaluation process, PIMCO review board effectiveness. This factor represents our assessment of board leadership. Leading company’s often have diverse boards with deep expertise in banking, risk and compliance and have a track record of replacing underperforming directors. Possible negatives included a combined CEO/Chair role, ongoing regulatory citations, and/or inconsistent strategic focus. We seek to emphasize best-in-class issuers with diverse, independent board oversight and limit investment in issuers with potential board leadership risks. Additionally, we engage with issuers to improve board issues.
• Executive Pay: Positive Investment - Emphasize best-in-class issuers and engage with issuers on areas such as if sustainability outcomes are embedded in executive compensation.

Products

• Alcohol: Restricted/Exclusionary Investment - This Fund excludes issuers that earn more than 10% in revenues from the production or sale of alcoholic beverages.
• Animal Welfare: Restricted/Exclusionary Investment - The Fund excludes issuers on PETA/USDA watch lists as well as issuers that are involved in the commercial animal husbandry for the purpose of food production as well as animal testing.
• Defense/Weapons: Restricted/Exclusionary Investment - Excludes issuers earning more than 10% in revenues from ‘military equipment’ as defined below: • Controversial weapons: Among other restrictions, the fund excludes companies involved in the production or manufacturing of controversial weapons such as biological weapons, cluster munitions, and landmines. • Conventional weapons: The fund excludes companies that earn more than 10% in revenue from conventional weapons. The exclusion restricts companies that derive more than 10% in revenue from weapons systems, components, and support systems and services, such as Boeing and Lockheed Martin. • Nuclear weapons: Lastly, the fund excludes companies that produce or manufacture delivery platforms, support systems, and other components for nuclear weapons.
• Gambling: Restricted/Exclusionary Investment - The Fund excludes issuers that earn more than 10% in revenues from gambling.
• Tobacco: Restricted/Exclusionary Investment - The Fund excludes issuers that earn more than 10% in revenues from the production or sale of tobacco.

Other

• Other/Qualitative: Exclude issuers that earn more than 10% in revenues from adult entertainment services, exclude issuers involved in private prisons, and exclude issuers earning more than 10% in revenues from the production or sale of civilian firearms. PIMCO’s Exclusions Advisory Group develops a list of issuers and industries (collectively, the “Dynamic Exclusions List”) which may be excluded from the portfolio due to business practices which are currently (but not necessarily fundamentally) misaligned with ESG principles or which have failed to effectively respond to PIMCO’s engagement efforts. In determining issuers for the Dynamic Exclusions List, the ESG Advisory Group references globally accepted norms such as the UN Global Compact Principles, the UN Guiding Principles on Business and Human Rights, and the International Labour Organization Conventions.
• Shareholder Engagement - Private Dialogue: Conducted with companies on environmental, social or governance issues
• Description of Shareholder Engagement: Proactive and collaborative engagement with fixed income issuers (rather than equity shareholders) is a key component of PIMCO’s ESG investment process. While engagement is traditionally associated with equity investing, bonds are an important source of corporate financing, dwarfing the size of equity issuances. As a large credit investor, PIMCO is able to leverage its scale and relationships with senior management to bear greater influence as a steward of client capital. The objective of engagement at PIMCO is to influence change, improve returns and reduce risks for our clients. We believe that bondholder engagement in the research phase is critical to understanding the risk and reward profile of the issuance and ultimately making buy/sell decisions. Given PIMCO's size and global presence, our analysts and portfolio managers spend a significant amount of time meeting with senior management at the companies we invest in on behalf of our clients. In addition to discussing financial matters, we also focus on strategic issues that often relate to ESG risks and responsible business management practices. ESG engagement efforts include asking detailed questions to find out how the risk management framework and business strategy addresses the operational risks from climate change. Our engagement process is driven by three guiding principles:  Think like a treasurer: We seek to identify issuers which can benefit from engagement, then develop a set of core engagement objectives tailored to each issuer.  Engage like a partner: We do not take an activist investor approach, believing that successful bondholder engagement is based on collaboration, productive dialogue and mutual agreement on objectives.  Hold to account as a lender: Our engagement process measures progress against a pre-defined benchmark, which is customized by issuer. At the outset of the process, we determine appropriate remedies if underperformance is material and are willing to divest if necessary. We engage with issuers in a constructive and collaborative way to positively influence their ESG practices over time. As a steward of capital, we believe our investment decisions should be forward-looking. Allocating capital toward those issuers willing to improve the sustainability of their business practices may generate a significantly greater impact than simply excluding those issuers with poor ESG metrics and favouring those with strong metrics. For example, PIMCO works to influence and strongly encourage firms to move towards greater transparency for reporting and disclosure among industries, this includes, but does not pertain only to, greater disclosure on carbon emission, water usage, and energy usage.

Performance Data - [Return to Top]

Data provided by: - Information current as of December 31, 2023

Year-to-date rate of return: 5.79%

1-year rate of return: 5.79%

3-year rate of return: -4.06%

5-year rate of return: 0.95%

10-year rate of return: 1.62%

Previous year rate of return: -15.62%

Management fee: 0.5%

Expense ratio: 0.61%

Standard deviation: 8.68%

Benchmark used: Barclays Capital US Aggregate Bond | External link (Opens in a new window)

Disclaimer: --

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