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Thomas Swaney
Senior Vice President, Head of Alternative Fixed Income, U.S.
Biography

Benjamin Gord
Vice President and Portfolio Manager
Biography

Tanguy Le Saout
Head of European Fixed Income and Co-Portfolio Manager
Biography

Cosimo Marasciulo
Head of Government Bonds - Europe and Co-Portfolio Manager
Biography

Changing Markets Have Become More Difficult to Navigate.
Liquid Alternative Investments May Help.

The risk of rising interest rates presents new challenges to fixed income investors who, for the past 20 years, have relied on bonds with longer durations¹ to provide portfolio diversification in the protracted low-rate environment. As rates begin to rise, liquid alternative investments may help investors:

  • Increase return potential
    Positive Return Potential - Increased global market volatility, as well as potential portfolio volatility caused by rising interest rates, could make it more difficult for investors to pursue positive return going forward.


  • Enhance diversification²
    Diversification – In times of market stress, the performance of traditional asset classes has tended to become more correlated (moving in the same direction at the same time)6, which makes effective diversification difficult.7


  • Mitigate risk and the effects of drawdown in difficult markets
    Interest rate risk – As rates begin to rise, bonds with longer durations (higher price sensitivity to rising rates) may lose their effectiveness as portfolio diversifiers. They may also become a source of portfolio volatility.

Source: Morningstar. Chart prepared by Pioneer. Data reflects past performance, which is no guarantee of future results. These examples are hypothetical in nature and not intended to represent the performance of any Pioneer product. Equities represented by The Standard & Poor’s 500 Stock Index, a broad measure of U.S. stock market performance. Fixed Income is represented by the Barclays U.S. Aggregate Bond Index, a broad measure of U.S. bond market performance. Liquid Alternatives represented by Credit Suisse Hedge Fund Index, a broad measure of U.S. hedge fund performance. Indices are unmanaged. It is not possible to invest directly in an index.
1. Duration is a measure of a fixed income investment’s sensitivity to rising interest rates, expressed in years.
2. Diversification does not assure a profit or protect against a loss in a declining market.
4. Standard Deviation is a statistical measure of the historical volatility of a portfolio.
5. Market Drawdown is a measure of an investment’s financial risk – the percentage change of the peak-to-trough decline over a specific period of time.
6. Sharpe Ratio is a measure of excess return per unit of risk, as defined by standard deviation. A higher Sharpe ratio suggests better risk-adjusted performance.

Today's Market Challenges

  • Positive Return Potential - Increased global market volatility, as well as potential portfolio volatility caused by rising interest rates, could make it more difficult for investors to pursue positive return going forward.
  • Diversification – In times of market stress, the performance of traditional asset classes has tended to become more correlated (moving in the same direction at the same time)7, which makes effective diversification difficult.8
  • Interest rate risk – As rates begin to rise, bonds with longer durations (higher price sensitivity to rising rates) may lose their effectiveness as portfolio diversifiers. They may also become a source of portfolio volatility.

7. Correlation is the degree to which assets or asset prices move in relation to one another. A correlation of +1 implies that they move in lockstep, in the same direction. A correlation of -1 implies they move in opposite directions. A zero correlation indicates their movements are completely random.
8. Source: Barclays POINT, Bloomberg.

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Our Strengths in Alternative Investing

Pioneer’s approach to liquid alternative investing reflects our heritage as value managers. We pursue opportunities created by structural market imbalances that may cause security prices to diverge from fair value. Our experienced investment professionals use extensive independent fundamental and quantitative research and a strict, risk-managed process to construct portfolios that help investors pursue their goals effectively though changing market environments.

  • Distinctive investment approach that seeks to generate positive returns and low correlations to traditional asset classes

  • An integrated global investment platform

  • An experienced investment management team that includes asset class specialists across key fixed income sectors

  • Time-tested risk budgeting capabilities

   Capabilities Pioneer Long/Short Global Bond Fund Pioneer Long/Short Opportunistic Credit Fund
Ability to short sell
Sees to Manage Drawdown10
Ability to Hedge Interest Rate Risk
Unconstrained Investment Universe
Traditional Market Exposure
Low/Moderate
Moderate Moderate/High
Correlation11 to Fixed Income Markets
Low
Low Low/Mid
Target Duration12 (years)
-3 to 3
-3 to 3 -4 to 4
Target Volatility
In line with 3-month U.S.Treasuries
In line with the broad fixed income market In line with the broad equity market

10. Drawdown is a measure of an investment’s financial risk – the percentage change of the peak-to-trough decline over a specific period of time.
11. Correlation is the degree to which assets or asset prices move in relation to one another. A correlation of +1 implies that they move in lockstep, in the same direction. A correlation of -1 implies they move in opposite directions. A zero correlation indicates their movements are completely random.
12. Duration is a measure of a fixed income investment’s sensitivity to rising interest rates, expressed in years.