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en-US Stable, experienced team. The structured products team tasked with running the structured return strategy have a long and successful history trading options strategies across varied markets. This tenured and stable portfolio management team earns an Above Average People Pillar rating. The team's experience managing option-writing strategies is longer than this mutual fund's December 2012 inception date implies. Lead manager Greg Tournant joined Allianz in 2002 and started the structured products group in 2005. Two of his colleagues have worked with him since the group's founding. Tournant receives support from comanagers Trevor Taylor and Stephen Bond-Nelson, who joined the structured products group in 2008 and 2005, respectively. The team has been very stable over the last five years, adding three research analysts and losing one in that time. Overall, the team is staffed with four portfolio managers and five supporting analysts. While lead manager Tourant's ongoing research and discretionary input is important, the team thoughtfully rotates responsibilities to avoid specialization. The managers and analysts share responsibility for testing the quantitative model as well as contributing to discretionary decisions. The strategy also benefits from broader resources at Allianz Global Investors. The firm's independent risk management function oversees the structured alpha platform, monitoring daily trading activity. Long and short volatilty, mostly market-neutral. The portfolio generally contains three types of trades that are complementary. Range-bound trades, where most of this strategy's excess returns come from, combine a long position in an S&P 500 ETF with in-the-money call options sold against the index ETF. The resulting portfolio won't keep pace with the S&P 500 when the index climbs; instead, it receives income from selling options. Directional spread trades, positions meant as diversifiers, are designed to add value when the market behaves unusually. The team uses more discretion when setting these trades, aiming to take advantage of options market mispricing based on statistical analysis. Finally, the portfolio maintains a constant hedge against large equity market sell-offs, which would soften the blow during a sudden market crash, though it is not designed for full protection against steep and prolonged market declines. The put protection varies in notional size but typically costs between 0.5%-1.5% of net asset value depending on the premium earned from selling options. The portfolio can contain anywhere between 200 and 600 individual options contracts. The team staggers positions across 15-30 different expiration dates at a time to make sure the entire portfolio does not expire on the same day. Positions have an average tenor of around six weeks, though they tend to range from four to 10 weeks. A combination of systematic and discretionary management. AllianzGI Structured Return's disciplined, research-intensive, and risk-aware process helps overcome concerns about the complexities of this options-based portfolio, resulting in an upgrade to the Process Pillar rating to Above Average. The strategy's goal is to generate returns of roughly 4% to 6% annualized in rising, falling, or flat equity markets while protecting the portfolio against a sudden market crash. The team looks to accomplish this by assembling a portfolio of S&P 500 options trades designed to capture the equity insurance risk premium (the difference between expected and realized volatility). The team uses a statistical model that analyzes historical equity index price movements to determine probabilities of future market moves and looks for discrepancies between that and what options markets are predicting. The portfolio is adjusted dynamically and includes a variety of long-short options positions. Complex options strategies can experience sharp losses when realized volatility spikes. This team's disciplined focus on risk management--through limits on leverage, perennial crash protection through put option hedges, position diversity across expirations, and the managers' ability to adjust the risk profile during volatile markets--gives us confidence this strategy can continue to overcome such short-term setbacks. This fund is a satellite player that will likely remain uncorrelated to most market moves. This fund remains susceptible to periodic losses especially because of selling put options. Supporting Player A complex options strategy with careful risk management. Allianz GI Structured Return's disciplined process, dedication to risk management, and experienced team earn a Morningstar Analyst Rating of Bronze for the cheapest share classes and Neutral for its most expensive share class. Given the retail share classes' higher costs and the strategy's complexities, it may not be suitable for those investors. This options-trading strategy aims to produce modest market-neutral returns (4% to 6% per year) while also providing protection against a market crash. The primary source of returns comes from collecting premium from in-the-money call options sold against an S&P 500 ETF. The managers augment that strategy with directional spread trades, which attempt to capture larger, unexpected market moves in either direction. Finally, the team buys deep out-of-the money put options which provide tail risk protection against steep equity market declines. The team's experience and options data research gives them an edge compared to peers. Greg Tournant, Trevor Taylor, and Stephen Bond-Nelson have managed the fund since its 2012 inception and have traded options strategies as a team since 2008, when Taylor joined Allianz. Lead manager Greg Tournant spends about half his time on researching and improving the strategy's implementation. Options strategies can suffer sharp losses when volatility spikes and equity markets whipsaw, limiting their appeal for risk-averse investors. However, this team's focus on risk management and long history of successfully navigating market volatility should continue to reward patient investors. The team performs a daily quantitative risk analysis, which includes a variety of stress tests, and also benefits from Allianz Global Investors' independent risk oversight with real-time positioning monitoring. Because of this robust risk-management process, we've upgraded the strategy's Process Pillar rating to Above Average. Since its inception, the fund has delivered on its goals, gaining 4.5% annualized (institutional shares) with a beta of less than 0.2 to equities. 1704 1704 Barbara Claus Barbara Claus Allianz Global Investors is a large global asset manager with more than EUR 500 billion in assets. The firm offers a wide range of products, covering all asset classes, but with a focus purely on active management. It has grown organically and through acquisitions since 1998. From 2016 until 2018, the company has undergone a restructuring initiative under which every business unit was evaluated for its competitiveness. This has been accompanied by job cuts, mainly in noninvestment functions. After a period of elevated turnover between 2014 to 2017, including several senior portfolio manager departures, investment staff turnover has decreased in 2018. The firm has several areas of strength, such as European and Chinese equities, small caps, and convertibles, but the overall quality of the fund lineup is only average. For most managers, it is now mandatory to invest a part of their variable remuneration into their own funds, which supports alignment, and the firm has introduced a new, performance-oriented fee structure with very low base fees across several regions and products, though so far it applies to a small percentage of assets only. The bonus structure puts most weight on three-year performance, which we think is acceptable but could be further improved by taking longer periods into account. All things considered, we retain a Neutral Parent Pillar rating. Pockets of strength but neutral overall. 2019-10-23T15:32:00 2019-10-23T20:32:00Z A mild ride. AllianzGI Structured Return has historically offered consistent positive returns with attractive downside protection. The two most important factors for forward-looking performance for the strategy are the spread between implied and realized volatility and the current level of the CBOE Volatility Index (VIX), a measure of the S&P 500's expected volatility. The fund targets a 4%-6% annual return, net of fees. Since January 2013, the fund's institutional shares have returned 4.5% annualized. Over that same time period, the fund has captured only 14% of the S&P 500's downside returns and exhibited a beta of less than 0.2 to the index, mostly achieving its objective of providing steady gains. However, the fund's correlation with equities can potentially spike during market shocks. For example, in December 2018 when the S&P 500 sold off more than 9%, the fund lost 6.7% in a matter of days. In these instances, the options' mark-to-market losses can cause short-term pain given the non-linearity of options pricing. Investors should be prepared to hold the fund through these challenging periods, though, as the team's disciplined, risk-aware approach has helped the fund quickly recoup losses from such events in the past. During the full month in December 2018, for instance, the fund only lost 1.1%. There was insufficient cost data available for this investment at time of publication. F00000XUO7 A complex options strategy with careful risk management. Allianz GI Structured Return's disciplined process, dedication to risk management, and experienced team earn a Morningstar Analyst Rating of Bronze for the cheapest share classes and Neutral for its most expensive share class. Given the retail share classes' higher costs and the strategy's complexities, it may not be suitable for those investors. This options-trading strategy aims to produce modest market-neutral returns (4% to 6% per year) while also providing protection against a market crash. The primary source of returns comes from collecting premium from in-the-money call options sold against an S&P 500 ETF. The managers augment that strategy with directional spread trades, which attempt to capture larger, unexpected market moves in either direction. Finally, the team buys deep out-of-the money put options which provide tail risk protection against steep equity market declines. The team's experience and options data research gives them an edge compared to peers. Greg Tournant, Trevor Taylor, and Stephen Bond-Nelson have managed the fund since its 2012 inception and have traded options strategies as a team since 2008, when Taylor joined Allianz. Lead manager Greg Tournant spends about half his time on researching and improving the strategy's implementation. Options strategies can suffer sharp losses when volatility spikes and equity markets whipsaw, limiting their appeal for risk-averse investors. However, this team's focus on risk management and long history of successfully navigating market volatility should continue to reward patient investors. The team performs a daily quantitative risk analysis, which includes a variety of stress tests, and also benefits from Allianz Global Investors' independent risk oversight with real-time positioning monitoring. Because of this robust risk-management process, we've upgraded the strategy's Process Pillar rating to Above Average. Since its inception, the fund has delivered on its goals, gaining 4.5% annualized (institutional shares) with a beta of less than 0.2 to equities. 1704 1704 Barbara Claus Barbara Claus Allianz Global Investors is a large global asset manager with more than EUR 500 billion in assets. The firm offers a wide range of products, covering all asset classes, but with a focus purely on active management. It has grown organically and through acquisitions since 1998. From 2016 until 2018, the company has undergone a restructuring initiative under which every business unit was evaluated for its competitiveness. This has been accompanied by job cuts, mainly in noninvestment functions. After a period of elevated turnover between 2014 to 2017, including several senior portfolio manager departures, investment staff turnover has decreased in 2018. The firm has several areas of strength, such as European and Chinese equities, small caps, and convertibles, but the overall quality of the fund lineup is only average. For most managers, it is now mandatory to invest a part of their variable remuneration into their own funds, which supports alignment, and the firm has introduced a new, performance-oriented fee structure with very low base fees across several regions and products, though so far it applies to a small percentage of assets only. The bonus structure puts most weight on three-year performance, which we think is acceptable but could be further improved by taking longer periods into account. All things considered, we retain a Neutral Parent Pillar rating. Pockets of strength but neutral overall. 2019-10-23T15:32:00 2019-10-23T20:32:00Z A mild ride. AllianzGI Structured Return has historically offered consistent positive returns with attractive downside protection. The two most important factors for forward-looking performance for the strategy are the spread between implied and realized volatility and the current level of the CBOE Volatility Index (VIX), a measure of the S&P 500's expected volatility. The fund targets a 4%-6% annual return, net of fees. Since January 2013, the fund's institutional shares have returned 4.5% annualized. Over that same time period, the fund has captured only 14% of the S&P 500's downside returns and exhibited a beta of less than 0.2 to the index, mostly achieving its objective of providing steady gains. However, the fund's correlation with equities can potentially spike during market shocks. For example, in December 2018 when the S&P 500 sold off more than 9%, the fund lost 6.7% in a matter of days. In these instances, the options' mark-to-market losses can cause short-term pain given the non-linearity of options pricing. Investors should be prepared to hold the fund through these challenging periods, though, as the team's disciplined, risk-aware approach has helped the fund quickly recoup losses from such events in the past. During the full month in December 2018, for instance, the fund only lost 1.1%. There was insufficient cost data available for this investment at time of publication. F00000ONQW A complex options strategy with careful risk management. Allianz GI Structured Return's disciplined process, dedication to risk management, and experienced team earn a Morningstar Analyst Rating of Bronze for the cheapest share classes and Neutral for its most expensive share class. Given the retail share classes' higher costs and the strategy's complexities, it may not be suitable for those investors. This options-trading strategy aims to produce modest market-neutral returns (4% to 6% per year) while also providing protection against a market crash. The primary source of returns comes from collecting premium from in-the-money call options sold against an S&P 500 ETF. The managers augment that strategy with directional spread trades, which attempt to capture larger, unexpected market moves in either direction. Finally, the team buys deep out-of-the money put options which provide tail risk protection against steep equity market declines. The team's experience and options data research gives them an edge compared to peers. Greg Tournant, Trevor Taylor, and Stephen Bond-Nelson have managed the fund since its 2012 inception and have traded options strategies as a team since 2008, when Taylor joined Allianz. Lead manager Greg Tournant spends about half his time on researching and improving the strategy's implementation. Options strategies can suffer sharp losses when volatility spikes and equity markets whipsaw, limiting their appeal for risk-averse investors. However, this team's focus on risk management and long history of successfully navigating market volatility should continue to reward patient investors. The team performs a daily quantitative risk analysis, which includes a variety of stress tests, and also benefits from Allianz Global Investors' independent risk oversight with real-time positioning monitoring. Because of this robust risk-management process, we've upgraded the strategy's Process Pillar rating to Above Average. Since its inception, the fund has delivered on its goals, gaining 4.5% annualized (institutional shares) with a beta of less than 0.2 to equities. 1704 1704 Barbara Claus Barbara Claus Allianz Global Investors is a large global asset manager with more than EUR 500 billion in assets. The firm offers a wide range of products, covering all asset classes, but with a focus purely on active management. It has grown organically and through acquisitions since 1998. From 2016 until 2018, the company has undergone a restructuring initiative under which every business unit was evaluated for its competitiveness. This has been accompanied by job cuts, mainly in noninvestment functions. After a period of elevated turnover between 2014 to 2017, including several senior portfolio manager departures, investment staff turnover has decreased in 2018. The firm has several areas of strength, such as European and Chinese equities, small caps, and convertibles, but the overall quality of the fund lineup is only average. For most managers, it is now mandatory to invest a part of their variable remuneration into their own funds, which supports alignment, and the firm has introduced a new, performance-oriented fee structure with very low base fees across several regions and products, though so far it applies to a small percentage of assets only. The bonus structure puts most weight on three-year performance, which we think is acceptable but could be further improved by taking longer periods into account. All things considered, we retain a Neutral Parent Pillar rating. Pockets of strength but neutral overall. 2019-10-23T15:32:00 2019-10-23T20:32:00Z A mild ride. AllianzGI Structured Return has historically offered consistent positive returns with attractive downside protection. The two most important factors for forward-looking performance for the strategy are the spread between implied and realized volatility and the current level of the CBOE Volatility Index (VIX), a measure of the S&P 500's expected volatility. The fund targets a 4%-6% annual return, net of fees. Since January 2013, the fund's institutional shares have returned 4.5% annualized. Over that same time period, the fund has captured only 14% of the S&P 500's downside returns and exhibited a beta of less than 0.2 to the index, mostly achieving its objective of providing steady gains. However, the fund's correlation with equities can potentially spike during market shocks. For example, in December 2018 when the S&P 500 sold off more than 9%, the fund lost 6.7% in a matter of days. In these instances, the options' mark-to-market losses can cause short-term pain given the non-linearity of options pricing. Investors should be prepared to hold the fund through these challenging periods, though, as the team's disciplined, risk-aware approach has helped the fund quickly recoup losses from such events in the past. During the full month in December 2018, for instance, the fund only lost 1.1%. There was insufficient cost data available for this investment at time of publication. F00000ONQX A complex options strategy with careful risk management. Allianz GI Structured Return's disciplined process, dedication to risk management, and experienced team earn a Morningstar Analyst Rating of Bronze for the cheapest share classes and Neutral for its most expensive share class. Given the retail share classes' higher costs and the strategy's complexities, it may not be suitable for those investors. This options-trading strategy aims to produce modest market-neutral returns (4% to 6% per year) while also providing protection against a market crash. The primary source of returns comes from collecting premium from in-the-money call options sold against an S&P 500 ETF. The managers augment that strategy with directional spread trades, which attempt to capture larger, unexpected market moves in either direction. Finally, the team buys deep out-of-the money put options which provide tail risk protection against steep equity market declines. The team's experience and options data research gives them an edge compared to peers. Greg Tournant, Trevor Taylor, and Stephen Bond-Nelson have managed the fund since its 2012 inception and have traded options strategies as a team since 2008, when Taylor joined Allianz. Lead manager Greg Tournant spends about half his time on researching and improving the strategy's implementation. Options strategies can suffer sharp losses when volatility spikes and equity markets whipsaw, limiting their appeal for risk-averse investors. However, this team's focus on risk management and long history of successfully navigating market volatility should continue to reward patient investors. The team performs a daily quantitative risk analysis, which includes a variety of stress tests, and also benefits from Allianz Global Investors' independent risk oversight with real-time positioning monitoring. Because of this robust risk-management process, we've upgraded the strategy's Process Pillar rating to Above Average. Since its inception, the fund has delivered on its goals, gaining 4.5% annualized (institutional shares) with a beta of less than 0.2 to equities. 1704 1704 Barbara Claus Barbara Claus Allianz Global Investors is a large global asset manager with more than EUR 500 billion in assets. The firm offers a wide range of products, covering all asset classes, but with a focus purely on active management. It has grown organically and through acquisitions since 1998. From 2016 until 2018, the company has undergone a restructuring initiative under which every business unit was evaluated for its competitiveness. This has been accompanied by job cuts, mainly in noninvestment functions. After a period of elevated turnover between 2014 to 2017, including several senior portfolio manager departures, investment staff turnover has decreased in 2018. The firm has several areas of strength, such as European and Chinese equities, small caps, and convertibles, but the overall quality of the fund lineup is only average. For most managers, it is now mandatory to invest a part of their variable remuneration into their own funds, which supports alignment, and the firm has introduced a new, performance-oriented fee structure with very low base fees across several regions and products, though so far it applies to a small percentage of assets only. The bonus structure puts most weight on three-year performance, which we think is acceptable but could be further improved by taking longer periods into account. All things considered, we retain a Neutral Parent Pillar rating. Pockets of strength but neutral overall. 2019-10-23T15:32:00 2019-10-23T20:32:00Z A mild ride. AllianzGI Structured Return has historically offered consistent positive returns with attractive downside protection. The two most important factors for forward-looking performance for the strategy are the spread between implied and realized volatility and the current level of the CBOE Volatility Index (VIX), a measure of the S&P 500's expected volatility. The fund targets a 4%-6% annual return, net of fees. Since January 2013, the fund's institutional shares have returned 4.5% annualized. Over that same time period, the fund has captured only 14% of the S&P 500's downside returns and exhibited a beta of less than 0.2 to the index, mostly achieving its objective of providing steady gains. However, the fund's correlation with equities can potentially spike during market shocks. For example, in December 2018 when the S&P 500 sold off more than 9%, the fund lost 6.7% in a matter of days. In these instances, the options' mark-to-market losses can cause short-term pain given the non-linearity of options pricing. Investors should be prepared to hold the fund through these challenging periods, though, as the team's disciplined, risk-aware approach has helped the fund quickly recoup losses from such events in the past. During the full month in December 2018, for instance, the fund only lost 1.1%. There was insufficient cost data available for this investment at time of publication. F00000ONR9 A complex options strategy with careful risk management. Allianz GI Structured Return's disciplined process, dedication to risk management, and experienced team earn a Morningstar Analyst Rating of Bronze for the cheapest share classes and Neutral for its most expensive share class. Given the retail share classes' higher costs and the strategy's complexities, it may not be suitable for those investors. This options-trading strategy aims to produce modest market-neutral returns (4% to 6% per year) while also providing protection against a market crash. The primary source of returns comes from collecting premium from in-the-money call options sold against an S&P 500 ETF. The managers augment that strategy with directional spread trades, which attempt to capture larger, unexpected market moves in either direction. Finally, the team buys deep out-of-the money put options which provide tail risk protection against steep equity market declines. The team's experience and options data research gives them an edge compared to peers. Greg Tournant, Trevor Taylor, and Stephen Bond-Nelson have managed the fund since its 2012 inception and have traded options strategies as a team since 2008, when Taylor joined Allianz. Lead manager Greg Tournant spends about half his time on researching and improving the strategy's implementation. Options strategies can suffer sharp losses when volatility spikes and equity markets whipsaw, limiting their appeal for risk-averse investors. However, this team's focus on risk management and long history of successfully navigating market volatility should continue to reward patient investors. The team performs a daily quantitative risk analysis, which includes a variety of stress tests, and also benefits from Allianz Global Investors' independent risk oversight with real-time positioning monitoring. Because of this robust risk-management process, we've upgraded the strategy's Process Pillar rating to Above Average. Since its inception, the fund has delivered on its goals, gaining 4.5% annualized (institutional shares) with a beta of less than 0.2 to equities. 1704 1704 Barbara Claus Barbara Claus Allianz Global Investors is a large global asset manager with more than EUR 500 billion in assets. The firm offers a wide range of products, covering all asset classes, but with a focus purely on active management. It has grown organically and through acquisitions since 1998. From 2016 until 2018, the company has undergone a restructuring initiative under which every business unit was evaluated for its competitiveness. This has been accompanied by job cuts, mainly in noninvestment functions. After a period of elevated turnover between 2014 to 2017, including several senior portfolio manager departures, investment staff turnover has decreased in 2018. The firm has several areas of strength, such as European and Chinese equities, small caps, and convertibles, but the overall quality of the fund lineup is only average. For most managers, it is now mandatory to invest a part of their variable remuneration into their own funds, which supports alignment, and the firm has introduced a new, performance-oriented fee structure with very low base fees across several regions and products, though so far it applies to a small percentage of assets only. The bonus structure puts most weight on three-year performance, which we think is acceptable but could be further improved by taking longer periods into account. All things considered, we retain a Neutral Parent Pillar rating. Pockets of strength but neutral overall. 2019-10-23T15:32:00 2019-10-23T20:32:00Z A mild ride. AllianzGI Structured Return has historically offered consistent positive returns with attractive downside protection. The two most important factors for forward-looking performance for the strategy are the spread between implied and realized volatility and the current level of the CBOE Volatility Index (VIX), a measure of the S&P 500's expected volatility. The fund targets a 4%-6% annual return, net of fees. Since January 2013, the fund's institutional shares have returned 4.5% annualized. Over that same time period, the fund has captured only 14% of the S&P 500's downside returns and exhibited a beta of less than 0.2 to the index, mostly achieving its objective of providing steady gains. However, the fund's correlation with equities can potentially spike during market shocks. For example, in December 2018 when the S&P 500 sold off more than 9%, the fund lost 6.7% in a matter of days. In these instances, the options' mark-to-market losses can cause short-term pain given the non-linearity of options pricing. Investors should be prepared to hold the fund through these challenging periods, though, as the team's disciplined, risk-aware approach has helped the fund quickly recoup losses from such events in the past. During the full month in December 2018, for instance, the fund only lost 1.1%. There was insufficient cost data available for this investment at time of publication. F00000ONRA Live