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PIMCO Long-Term Real Return Instl PRAIX Sustainability

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Sustainability Analysis

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Sustainability Summary

PIMCO Long-Term Real Return Fund has several promising attributes that may appeal to sustainability-focused investors.

PIMCO Long-Term Real Return Fund's holdings are exposed to average levels of ESG risk relative to those of its peers in the US Fixed Income category, thus earning it an average Morningstar Sustainability Rating of 3 globes. Competing funds in the category with ratings of 4 or 5 globes have less ESG risk in their holdings. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change, biodiversity, human capital, as well as bribery and corruption, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.

One key area of strength for PIMCO Long-Term Real Return Fund is its low Morningstar Portfolio Carbon Risk Score of 1.34 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy. The fund exhibits negligible exposure (0.65%) to companies with high or severe controversies. Controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Examples of types of controversies include bribery and corruption scandals, workplace discrimination and environmental incidents. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. Such controversies can also damage the reputation of both companies themselves and their shareholders.

One potential issue for a sustainability-focused investor is that PIMCO Long-Term Real Return Fund doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes.

ESG Commitment Level Asset Manager