Share Tool

Is it Time to Rethink Your Core? 

 

 

Since traditional bonds are not currently offering the rewards of a decade ago, it may be time to rethink your core fixed-income allocation.

Search

> Advanced Search

Tackling Today’s Market Risks by Looking Beyond Core Bonds

Investors need income despite a low-yield environment. With traditional bonds not currently offering the financial rewards they once did, now may be the time to rethink your core fixed-income strategy.

Morningstar Overall Rating™

AllianzGI Short Duration High Income Fund (ASHIX)
as of 7/31/2017. For Class I shares among 598 funds in the High Yield Bond category Morningstar measures risk-adjusted returns. The overall rating is a weighted average based on the 3- and 5-year star ratings.

Reasons to consider AllianzGI Short Duration High Income Fund:

  1. 1Manage interest-rate risk and volatility by investing in short-term, below-investment grade bonds

  2. 2Provide consistent income potential (monthly distribution of $0.06 since January 2014)

Changing Profiles

Traditional core bonds are no longer delivering the risk/reward outcomes we were used to

  • Yield
  • Duration
  • 7.2%
  • 5.2
  • 5.3%
  • 4.9
  • 2.6%
  • 6.1
As of 3/31/2017. Based on the Bloomberg Barclays US Aggregate Bond Index data. It is not possible to invest directly in an index.

Looking for Income? You May Have Just Found It.

For investors, finding a reliable source of income is only getting harder. No longer a one-stop solution, now may be the right time to rethink traditional core fixed-income strategies. Our short video takes a closer look at how we think you can help build a better portfolio for your clients—by seeing beyond tradition.

3 Key Ways to Manage Today’s Fixed-Income Risks

Not Like the Others

Built differently, the Fund is able to act distinct from the broader high-yield market

High-yield market performance during negative quarters

  • AllianzGI Short Duration High Inc Instl
  • BofAML US Master II TR
Source: IDS, Allianz Global Investors. Data as of first full month after fund inception 11/1/2011 – 3/31/2017. Class I shares.
Past performance is no guarantee of future results.

Maximum Drawdown
6/1/2015 to 1/31/2016

  1. -4.5%
  2. -9.8%

Equipped for Uncertainty

The Fund has held up well during unfavorable stock and bond environments

Performance in S&P 500 down quarters

Performance in S&P 500 down quarters
Source: IDS, Allianz Global Investors. Data as of first full month after fund inception 11/1/2011 – 3/31/2017. Class I shares. Past performance is no guarantee of future results. During periods of strong equity market performance the Fund will likely underperform.

Lower duration provides less interest rate sensitivity

Lower duration provides less interest rate sensitivity
Source: IDS, Allianz Global Investors. As of 3/31/2017.

All Risk Is Not Equal Risk

Taking on certain risk has the potential to be rewarding—benefiting returns over the long run

  1. Identify total portfolio risk with Sharpe ratio
  2. Identify downside risk with Sortino ratio
  • How we stack up:
  • Sharpe Ratio
  • Sortino Ratio
  • AllianzGI Short Duration High Income Fund
  • 1.52
  • 3.03
  • Bloomberg Barclays U.S. Aggregate Bond Index
  • 1.13
  • 2.09

The Outcome:

A strategy that can provide investors with risk-adjusted returns over the long term.

Since inception from 11/01/2011-6/30/2016
Sharpe ratio is a risk-adjusted measure that is calculated by using standard deviation and excess return to determine reward per unit of risk. The Sortino ratio is calculated by using downside deviation (downside risk) and excess return to determine reward per unit of downside risk. Higher Sharpe and Sortino ratios indicate that investors are being compensated for the risk’s they are taking.

Our Focus

Provide investors with a strong risk/reward profile over time

Risk/Return (November 2011 to March 2017)

Risk/Return
Sources: AllianzGI, Morningstar. Data as of first full month after fund inception 11/1/2011 – 3/31/2017. Class I shares. It is not possible to invest directly in an index. Performance quoted represents past performance. Past performance is no guarantee of future results. High Yield Bonds represents the BofA Merrill Lynch US High Yield Master II Index. EM Bonds represents JPM EMBI Global Index. Core Bonds represents Bloomberg Barclays US Aggregate Bond Index. 10-Year Treasury represents US Treasury T-Bill 10 Year. 5-Year Treasury represents US Treasury T-Bill 5 Year. 1-3 Year US Govt. Credit represents Bloomberg Barclays US Government/Credit 1-3 Year Index. 1-3 Year Treasury represents Bloomberg Barclays 1-3 Year US Treasury Index.

Our Goal

Build a portfolio that offers investors a consistent income stream with reduced risk

Our philosophy:

We believe that there are structural inefficiencies that exist in the front-end of the non-investment grade bond market. And that these inefficiencies are opportunities that can be tapped into—with robust credit research and diligent risk management techniques

Defining our portfolio:

A high level of current income with lower volatility than the broader high-yield market

The ability to preserve capital—and liquidity—while minimizing volatility

A strategy that can support an investor's core fixed-income allocation

Our unique process:

Selected from the bottom up—our portfolio is made up of high-yield bonds and bank loans

We are benchmark indifferent and maintain an approach that is focused on outcomes

A concentrated portfolio built on a foundation of 60 to 80 high-conviction issuers

Average Annual Total Returns QTD 1 Year 3 Year 5 Year Since Inception
(10/3/2011)
AllianzGI Short Duration High Income Fund – A shares at NAV 1.26% 9.39% 3.68% 4.44% 5.22%
AllianzGI Short Duration High Income Fund – A shares at MOP -1.02% 6.93% 2.90% 3.97% 4.79%
AllianzGI Short Duration High Income Fund – I shares 1.27% 9.65% 3.95% 4.71% 5.50%
Merrill Lynch High Yield US Corporates Cash Pay BB Rated 1-3 Yrs USD Unhedged 0.99% 7.19% 3.80% 4.90% 5.87%
As of 3/31/2017. Investment minimums, fees and expenses vary for different share classes. Other share classes are available.

Performance quoted represents past performance. Past performance is no guarantee of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than performance shown. For performance current to the most recent month end, visit our website at us.allianzgi.com. The MOP returns take into account the 2.25% maximum initial sales charge. The Fund’sexpense ratio is 0.86% for class A shares and 0.59% for I shares.

AllianzGI Short Duration High Income Fund offers investors an alternative to traditional core bonds by focusing on managing interest-rate risk—and volatility—while investing in short-term, below-investment grade bonds. At the same time, it looks to deliver a high level of income while offering a low expense ratio.

At Allianz Global Investors we want to partner with you to help meet your clients’ financial goals—by finding income when yields are low. For more information, please contact your Allianz Global Investors Investment Consultant at 1 800 926 4456.

Learn more ›

Investors should consider the investment objectives, risks, charges and expenses of any mutual fund carefully before investing. This and other information is contained in the fund’s prospectus and summary prospectus, which may be obtained by contacting your financial advisor. Click here for a complete list of the Allianz Funds prospectuses and summary prospectuses. Please read them carefully before you invest.

A Word About Risk: High-yield or “junk” bonds have lower credit ratings and involve a greater risk to principal. Derivative prices depend on the performance of an underlying asset; derivatives carry market, credit and liquidity risk. Investments in smaller companies may be more volatile and less liquid than investments in larger companies. Foreign markets may be more volatile, less liquid, less transparent and subject to less oversight, and values may fluctuate with currency exchange rates; these risks may be greater in emerging markets. Bond prices will normally decline as interest rates rise. The impact may be greater with longer-duration bonds. Unlike US Treasuries and T-bills, the securities in which the Fund invests are not guaranteed as to timely payment of interest and principal and are subject to greater risk. The market for certain securities may become illiquid, which could prevent the Fund from purchasing or selling these securities at an advantageous time or price and possibly delay redemptions of Fund shares.

Holdings are subject to change. The statements above reflect the typical investment philosophy and process applied to this strategy. At any given time, other factors may affect the investment process.

Standard deviation measures the volatility of a security and is derived from the security’s historical returns. The higher the standard deviation, the greater the risk. Duration is a measure of a portfolio’s price sensitivity expressed in years. Yield refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value. Years to Maturity is the bond maturity computed by using the earlier of either the call date or the final maturity date.

The Bloomberg Barclays US Aggregate Index is an unmanaged index of investment-grade, US dollar-denominated, fixed-income securities of domestic issuers having a maturity greater than one year. The BofA Merrill Lynch High Yield Master II Index tracks the performance of below investment grade (BBB), but not in default, US dollar-denominated corporate bonds publicly issued in the domestic market. The JPMorgan Emerging Market Bond Index (EMBI) are a set of three bond indices to track bonds in emerging markets operated by J P Morgan. The indices are the Emerging Markets Bond Index Plus, the Emerging Markets Bond Index Global and the Emerging Markets Bond Global Diversified Index. The Standard & Poor’s 500 Composite Index is an unmanaged index that is generally representative of the US stock market. The BofA Merrill Lynch 1-3 Year BB US Cash Pay High Yield Index is a subset of the BofA Merrill Lynch US Cash Pay High Yield Index including all securities with a remaining term to final maturity of less than three years and rated BB1 through BB3, inclusive. US Government bonds and Treasury bills are guaranteed by the US Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Bloomberg Barclays US Government/Credit 1-3 Year Index is the 1-3 Yr component of the Barclays Global Treasury Index. The Bloomberg Barclays Global Treasury Index tracks fixed-rate local currency government debt of investment grade countries. The Bloomberg Barclays 1-3 Year US Treasury Index is composed of all bonds of investment grade with a maturity between one and three years. Unless otherwise noted, index returns reflect the reinvestment of income dividends and capital gains, if any, but do not reflect fees, brokerage commissions or other expenses of investing. It is not possible to invest directly in an index.

Minimum investment for Institutional shares is $1 million, though this may be reduced for certain financial intermediaries that aggregate trades on behalf of investors.

Source for Morningstar information: Morningstar Inc. For funds with at least a three-year history, Morningstar calculates a risk-adjusted return measure that accounts for variation in a fund’s monthly performance (including the effects of all sales charges), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receives a rating of 5 stars; the next 22.5% 4 stars; the next 35% 3 stars; the next 22.5% 2 stars; and the bottom 10% 1 star. In the High Yield Bond category, AllianzGI Short Duration High Income Fund I shares received 4 stars/599 funds (3 years), 2 stars/474 funds (5 years). Other share classes have different ratings. © 2017 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.



Allianz Global Investors Distributors LLC, 1633 Broadway, New York, NY 10019-7585, us.allianzgi.com, 1-800-926-4456.
Product Focus 
156434 

Share

Facebook
LinkedIn
Twitter

You are currently leaving us.allianzgi.com and navigating to a third-party website. Allianz Global Investors Distributors LLC accepts no responsibility for content on third-party sites or for the services provided. When using the services provided by a third-party site, you are subject to that site’s terms of service and privacy rules, which you should review carefully.