Allianz Income and Growth
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For further details about the Fund, please contact your bank, financial advisor or call our investment hotline +852 2238 8000.
 
 
 
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High Yield Bonds:
Low default rate and stable potential income

 
The fundamentals in the high-yield market have greatly improved since the credit crisis of 2007-2008: balance sheets are stronger, leverage is lower and cash levels remain high. Consequently, the main risk associated with high-yield bonds – defaults – has diminished in recent years, from a historical 4% to 2.06%1 now.
   
Although high-yield spreads have come down significantly from their recent highs, low spreads have historically been accompanied by prolonged periods of compelling high-yield performance as corporate fundamentals improve. This causes the price of high yield bonds to rise, which can boost total return.
 
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Convertible Bonds:
Upside participation and less downside volatility

 
Convertible bonds consist in principle of bonds and stock options. Investors have the right to exchange the bonds for stocks of the company within a fixed time period. Convertible bonds aim to participate in the upside potential of the equity markets, while cushioning against downside volatility.
   
From January 1988 through June 2014, convertible bonds (up by an average of 2.5%2 in each quarter) participated in 93% of the upside of Treasuries (up by an average of 2.7% in each quarter) in up markets.

 
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Equities / Equities Securities:
Capital appreciation and income enhancement potentials

 
US high quality, large-cap stocks provide capital appreciation and income potential. In addition, covered call strategies pair a long position with a short-call option on the same stock. It can provide additional income from option premium and reduce exposure to equity market volatility.
   
From January 2000 through June 2014, a covered-call index has outperformed the S&P 500 Index, and has done so with significantly lower volatility as measured by annualised standard deviation (11.5% vs. 15.5%)3.
 
Source: All data quoted are Allianz Global Investors / IDS GmbH / Morningstar, as at 30 September 2014, unless stated otherwise.
   
Source: BofA Merrill Lynch, JP Morgan and Allianz Global Investors, as of 30 June 2014.
   
Source: BofA Merrill Lynch, FactSet, quarterly data from January 1988 to June 2014. Based on BofA Merrill Lynch All Convertibles All Qualities Index.
   
Source: Bloomberg, Factset, Allianz Global Investors. Based on CBOE S&P 500 Buy/Write Index (BXM) Index. Cumulative and incremental total returns, monthly data from January 1988 to June 2014.