A Unique Approach With Pacific Funds Core Income

Join Pacific Funds Fixed Income portfolio manager David Weismiller and senior managing director Dominic Nolan as they discuss the investment approach for Pacific Funds Core Income.


Describe the investment approach to managing Pacific Funds Core Income.

Dominic Nolan: Pacific Funds Core Income is an intermediate‐term bond fund with an emphasis on investment-grade corporate debt. The fund also has the flexibility to invest across the credit and broad investment grade spectrum.

David Weismiller: We believe this approach provides a higher level of income while maintaining the attributes of preservation of capital and diversification that investors have come to expect from their fixed-income allocation.

What makes your approach different from other managers?

Dominic Nolan: Most intermediate‐term bond funds focus on the non‐corporate areas of the investment-grade universe, such as Treasuries, Agencies, and Mortgages (see chart at 00:55). These areas represent over two-thirds of the Bloomberg Barclays U.S. Aggregate Bond Index, a broad fixed income benchmark. Pacific Funds Core Income is focused on a sector that represents approximately one quarter of the universe.

David Weismiller: While the yield investors receive from corporate debt can be attractive, it is important to understand the credit risk. We can actively mitigate this risk in different ways.

First, and probably most important, is being selective in what securities we choose. Since default risk tends to be the primary risk of corporate securities, understanding an issuer, or company, is critical. Our investment process is anchored in fundamental research, managed by an experienced team of professionals, and focused on analyzing individual credits. Over time, avoiding the defaults in corporate debt can help protect investor capital and favorably increase the risk/reward balance.

Second, we have the flexibility to invest in additional non‐corporate areas of fixed income, such as agencies or treasuries, which can not only diversify the risk of the portfolio but help decrease volatility in the event corporate debt experiences headwinds.

Dominic Nolan: In summary, Pacific Funds Core Income is aiming to deliver value through a focus on corporate debt securities with the flexibility to benefit from opportunities across the credit quality and investment-grade bond spectrum, while selectively investing in issues with which we have a high degree of conviction.

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