What is StocksPLUS®?
StocksPLUS, a unique and innovative equity management strategy introduced by PIMCO in 1986, is designed to outperform a given benchmark equity index and, at the same time, provide a very similar risk level to that of the benchmark. Typically referred to as an “enhanced index” strategy, StocksPLUS seeks to provide the best of what passive indexing and active management each attempt to deliver.
Similar to most passive index strategies, the equity market exposure in a StocksPLUS portfolio is designed to be identical to that of the benchmark index. However, unlike passive index strategies, StocksPLUS endeavors to provide investors with excess returns.
What makes StocksPLUS unique? The strategy combines PIMCO’s expertise in global fixed-income management with the merits of its “best-of-both worlds” construction, which entails obtaining the equity exposure via derivatives that are collateralized by a fixed income portfolio. Because the fixed income portfolio tends to have both a low correlation to equities and a focus on capital preservation, the combination gives StocksPLUS the potential to mitigate the volatility of the equity exposure amid changing market conditions.