LONZ - LONZ: Under The Radar Fund From PIMCO 7% Yield

2024-04-19 22:46:50 ET

Summary

• This article explores the PIMCO Senior Loan Active Exchange-Traded Fund ETF, a fixed income fund launched by PIMCO in 2022.
• LONZ offers a 7% yield while maintaining low volatility (1.95% annualized) compared to similar funds. This makes it attractive for investors seeking income with reduced risk.
• A key differentiator for LONZ is its active management by PIMCO, a well-established asset manager. This active approach is believed to contribute to the fund's outperformance compared to peers.
• The fund invests in leveraged loans, which sit high in the capital structure during bankruptcy proceedings. This positioning is considered to contribute to the fund's lower volatility.
• The article argues that LONZ is likely to continue outperforming due to the current market environment and PIMCO's ability to pick undervalued assets in the leveraged loan space.

Thesis

PIMCO is one of the largest asset managers in the world, with a very strong fixed income presence. Most investors reading our research are very familiar with the PIMCO fixed income closed end funds ('CEFs') which have managed very robust performances in the past decade via leveraging-up fixed income. We rarely stumble upon new names from PIMCO, but here we are reviewing the PIMCO Senior Loan Active Exchange-Traded Fund ETF ( LONZ ). We were unaware of this exchanged traded fund from PIMCO , a vehicle which focuses on leveraged loans and has an active approach to its portfolio management. ...

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