4 Reasons to Consider Pacific Funds Floating Rate Income

Pacific Funds Floating Rate Income fund is designed to seek high levels of income while limiting interest- rate sensitivity by investing primarily in floating-rate loans. The fund has generated consistent results across a variety of economic conditions as measured by four attributes.

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1. Performance: It’s delivered competitive results since inception

Pacific Funds Floating Rate Income (PLFRX), managed by portfolio managers with an average of over 20 years of investment experience, has delivered very competitive results since inception.

The Fund has:

  • The No. 1 alpha fund since inception at 0.45 vs. -0.85 for the Morningstar Bank Loan Category1 average relative to the Credit Suisse Leverage Loan Index.
  • 5-star Overall Morningstar rating for PLFRX out of 228 bank-loan funds based on risk-adjusted returns.
  • Lowest maximum drawdown of active bank loans funds since inception -10.56% vs. -13.59% for the Morningstar Bank Loan Category.

2. Selectivity: It uses a careful approach to investing in bank loans

Given current yield and interest-rate levels, bank loans offer an attractive income opportunity. But reaching for excess yield should be done with caution, as distressed loans or loans that trade below $90 have experienced three times more volatility in returns.

Pacific Funds Floating Rate Income focuses on:

  • Loans that typically trade at $90 or above
  • Companies with at least $100 million in EBITDA
  • High-conviction issuers, typically 80-150
This strategy has led to a fund that has only experienced one default since inception vs. an annual average of 23 for the bank-loan asset class, according to the Credit Suisse Leveraged Loan Index.

3. Historically Provided Downside Protection: The fund has provided consistency in both up and down markets

The fund’s agility and focus on larger, more liquid loans have helped it avoid some of the pitfalls that others have been plagued by during market downturns:

Pacific Funds Floating Rate Income has done well since its inception, weathering the volatility of market cycles while offering a diversification option to high-grade bonds:

4. Cost: It’s attractively priced, even compared to passive alternatives

At only 75 basis points, Pacific Funds Floating Rate Income fund offers a portfolio that is on average 30% less expensive than other active funds in the Morningstar Bank Loan Category:

For more information about Pacific Funds Floating Rate Income, visit PacificFunds.com.

For performance data current to the most recent month-end, call Pacific Funds at (800) 722-2333 or go to PacificFunds.com/Performance. Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance quoted. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than the original cost.

Definitions

Alpha is the excess return on an investment after adjusting for market-related volatility and random fluctuations.

One basis point is equal to 0.01%.

The Bloomberg US Aggregate Bond Index is composed of investment-grade U.S. government bonds, investment-grade corporate bonds, mortgage pass-through securities, and asset-backed securities, and is commonly used to track the performance of U.S. investment-grade bonds.

Correlation measures how a fund’s return moves in relation to an index benchmark.

The Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the U.S. senior secure-credit (leveraged-loan) market.

Downside capture ratios are calculated by taking the fund’s monthly return during the periods of negative benchmark performance and dividing it by the benchmark return.

EBITDA, or Earnings Before Interest, Tax, Depreciation, and Amortization, is a measure of a company’s profits before any of these net deductions are made.

Max drawdown is the maximum observed loss from a peak to a trough of an investment and is an indicator of downside risk over a specified time period.

Upside capture ratios for funds are calculated by taking the fund’s monthly return during months when the benchmark had a positive return and dividing it by the benchmark return during that same month.

Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance, placing more emphasis on downward variations and rewarding consistent performance. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars, and the bottom 10% receive one star. Morningstar Ratings for other share classes may have different performance characteristics. © 2022 Morningstar Investment Management, LLC. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (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. The Fund’s Class I shares also received a ten-year rating of 5 stars out of 140 funds, a five-year rating of 4 stars out of 209 funds and three-year rating of 4 stars out of 228 funds. For Overall, three-, five-, and ten-year (if applicable) Morningstar Ratings for other share classes, visit PacificFunds.com/Performance.

About Principal Risks

All investing involves risks including the possible loss of the principal amount invested. There is no guarantee the Fund will achieve its investment goal. Corporate bonds are subject to issuer risk in that their value may decline for reasons directly related to the issuer of the security. Not all U.S. government securities are checked or guaranteed by the U.S. government, and different government securities are subject to varying degrees of credit risk. Mortgage-related and other asset-backed securities are subject to certain rules affecting the housing market or the market for the assets underlying such securities. The Fund is subject to liquidity risk (the risk that an investment may be difficult to purchase, value, and sell particularly during adverse market conditions, because there is a limited market for the investment, or there are restrictions on resale) and credit risk (the risk an issuer may be unable or unwilling to meet its financial obligations, risking default). High-yield/high-risk bonds (“junk bonds”) and floating-rate loans (usually rated below investment grade) have greater risk of default than higher-rated securities/higher-quality bonds that may have a lower yield. The Fund is also subject to foreign-markets risk.

Pacific Life Insurance Company is the administrator for Pacific Funds. It is not a fiduciary and therefore does not give advice or make recommendations regarding investment products.

Investors should consider a fund’s investment goal, risks, charges, and expenses carefully before investing. The prospectus and/or summary prospectus contains this and other information and should be read carefully before investing and can be obtained by visiting PacificFunds.com.

Pacific Funds are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA), and are available through licensed third parties. Pacific Funds refers to Pacific Funds Series Trust.

For financial professional use only. Not for use with the public.

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