In periods of extreme market volatility, the Funds’ return may be subject to downside protection significantly lower than the Buffer and an upside limit significantly below the Approximate Cap (the “Cap”). A new Cap is established during each Rebalance Period and is dependent upon current market conditions. As such, the Cap is likely to change, sometimes significantly, from one Hedge Period to the next.

Opportunities across outcomes

The calculator provides clients with an indication of an ETF’s yield and duration for a given market price. The ACF Yield is the discount rate that equates the ETF’s aggregate cash flows (i.e., the sum of the cash flows of the ETF’s holdings) to a given ETF price. The cash flows are based on the yield to worst methodology in which a bond’s cash flows are assumed to occur at the call date (if applicable) or maturity, whichever results in the lowest yield for that bond holding. For a given ETF price, this calculator will estimate the corresponding ACF Yield and spread to the relevant government reference security yield.

NAVIGATING MARKET VOLATILITY: INSIGHTS FOR INVESTORS

At current valuations, we continue to find bonds attractive relative to equities (for more, see our latest Asset Allocation Outlook, “Prime Time for Bonds”), while fixed income can continue to offer correlation and diversification benefits in portfolios. Instead, cuts tend to coincide with rising unemployment and a falling output gap, when an economy is already in recession. Even in a handful of cases when a central bank did cut in the absence of recession, inflation had clearly peaked, while the unemployment rate rose back toward its longer-term average from a notably low level. With attractive valuations and yields still near 15-year highs, fixed income markets can offer an array of opportunities with the potential to weather multiple macroeconomic scenarios. Kareena Moledina As inflation continues to fall, the US central bank has cut interest rates again, trimming the Fed rate by 25 basis points.

INVESTING IN A SHRINKING ECONOMY

IShares funds are available through online brokerage firms.All iShares ETFs and ETPs trade commission free online through Fidelity.By clicking on the button below, you will leave BlackRock’s website. Pacific Investment Management Company LLC (“PIMCO”) is an investment adviser registered with the U.S. PIMCO Investments LLC (“PIMCO Investments”) is a broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). PIMCO Investments is the distributor of PIMCO investment products, and any PIMCO Content relating to those investment products is the sole responsibility of PIMCO Investments.

• Diversification and asset allocation may not protect against market risk or loss of principal.
• With more than twenty years of experience, iShares continues to drive progress for the financial industry.
• Depending on whether the current typical price is higher or lower than that of the preceding period, the volume for each period (price bar) is assigned a positive or negative.
• In essence, given higher income from bonds than in recent years, fixed income is “investable” again.

Their financial characteristics such as structure, risk and return are similar to those of traditional bonds from the same issuer. They range from investment grade to non-investment grade, though most corporate green bonds are investment grade. Like traditional bonds, green bonds come in short- or long-dated maturities and have various coupons and yields. We view fixed income investments as broadly appealing over our cyclical horizon, given attractive yields and valuations as well as the potential for resilience across multiple economic scenarios. Such resilience is especially important in the wake of the increase in geopolitical risk and market volatility over the past two years. Because attractive yields can be found in high quality bonds, investors do not need to step down in credit quality.

MORE INSIGHTS ON MANAGING VOLATILITY

Overall, we expect DM central banks to start rate cuts closer to the middle of 2024 (potentially a bit earlier for the Fed), with the exclusion of the Bank of Japan, which we think will continue with its plans for modest rate hikes this year. With inflation easing, developed market (DM) central banks have likely reached the end of their hiking cycles. Looking historically at returns in the first 12 months following rate cuts, most fixed income sectors have seen positive performance.

At the Secular Forum, held annually, we focus on the outlook for the next five years, allowing us to position portfolios to benefit from structural changes and trends in the global economy. Because we believe diverse ideas produce better investment results, we invite distinguished guest speakers – Nobel laureate economists, policymakers, investors, and historians – who bring valuable, multidimensional perspectives to our discussions. We also welcome the active participation of the PIMCO Global Advisory Board, a team of world-renowned experts on economic and political issues. In more credit-oriented markets, we continue to favor U.S. agency mortgage-backed securities as a high quality, liquid form of credit spread in portfolios.

Cash yields remain elevated, but investors can miss out by sitting in cash too long. The bond market rally in late 2023 highlighted how investors can achieve more attractive total return in high quality, medium-term bonds – through the combination of yield and price appreciation – without taking on greater interest rate risk in long-dated bonds. Historically, central banks do not tend to cut rates ahead of downturns, instead easing only after recessionary conditions appear and then delivering more cuts than markets anticipate. In the longer term, we continue to expect neutral policy rates to decline to levels similar to, or slightly above, those seen before the pandemic. Fixed income securities are subject to interest rate, inflation, credit and default risk. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.

If you are an individual retirement investor, contact your financial advisor or other fiduciary unrelated to PIMCO about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Forecasts and estimates have certain inherent limitations, and unlike an actual performance record, do not reflect actual trading, liquidity constraints, fees, and/or other costs. In addition, references to future results should not be construed as an estimate or promise of results that a client portfolio may achieve. PIMCO is a global leader in active fixed income with deep expertise across public and private markets.

The indicator is similar to the on-balance volume indicator, but it is more complex and combines several factors, including volatility coefficient, volume, and price movement, to assess buying and selling pressure. In areas such as private credit, commercial real estate, and bank loans, we believe there is an important distinction between the stock of existing assets and the flow of new investment opportunities. The existing stock faces real challenges from higher interest rates and a slowing economy, with a substantial distance navigating a changing bond markets remaining to mark private assets to more realistic, market-based price levels, especially in areas with fundamental weakness. We also expect to find good opportunities in emerging markets (EM), both in terms of local and external debt. We expect to be overweight EM foreign exchange, with diversified funding currencies to reduce the correlation between higher-carry EM currencies and global risk assets. After central banks globally raised rates in relative synchrony, their paths ahead are likely to be more differentiated.