Allocation strategy utilizing yen bonds and hedged foreign bonds

Investment in yen-hedged foreign bonds is increasingly gaining Japanese investors’ attention as global central banks have adopted easy monetary policy, which has generated attractive short/long yield differentials and pushed hedging costs lower. However, foreign bond investment focusing solely on yield differentials does not always guarantee outperformance compared to investment in yen-denominated bonds, and determining which strategy is more advantageous can be tricky as it can change over a short period. As such, we believe a flexible approach is effective in adjusting allocations among yen-denominated bonds and yen-hedged foreign bonds. PIMCO’s Global Yen Plus strategy aims to reduce risk and raise returns by implementing timely asset allocations in the broad yen-based bond market (Japanese bonds and yen-hedged foreign bonds). Asset allocations are determined through timely adjustments in independent yen-denominated bond and hedged foreign bond investment, seeking excess returns on two levels: from allocation decisions and investment in each asset class.


Target returns are calculated based on the assumption that all investment tools that are normally used with the strategy are available. Target returns should not be construed as an estimate or promise of results that a client portfolio may achieve.

The value of assets under management will be affected by, and fluctuate based upon, movements in prices of securities in the portfolio, financial market conditions, interest rates, and credit risk arising from changes in the financial condition of issuers of securities in the portfolio, among others. Where investments are made in foreign currency denominated assets, the value of the assets will also be affected by movements in foreign exchange rates. All profits and losses resulting from investments are for the account of the investor. Thus, there is no guarantee that the principal amount of the investment will be preserved, or that a certain return will be realized; rather, the investment could suffer a loss.

The fee charged for our activities related to the financial instruments business will vary depending on the investment trust acquired or the investment advisory agreement entered into, and thus these materials do not set forth specific fee amounts or their calculation methodologies.