PIMCO has launched the PIMCO Emerging Markets and Infrastructure Bond Fund. The underlying strategy, which is also available on a separate account basis, seeks to capitalise on the expected sharp increase in spending by developing nations on energy, transportation, water and waste treatment, telecommunications, public housing and development banks.

Emerging market governments around the world are targeting infrastructure investments as critical foundations for future growth, with over US$1trn of projects committed to or underway. Bonds that finance these projects typically offer attractive yields, often with lower volatility than seen in some other credit opportunities, PIMCO says. Additionally, the high priority that governments are giving to infrastructure may help to mitigate the credit risk of such investments, which in turn may limit correlations with emerging equity markets.

PIMCO notes that the fund is another step in its efforts to provide investment solutions developed to navigate what it calls the 'New Normal'. This refers to the firm's secular outlook that anticipates lower growth rates in industrialised countries and an increasing role of emerging economies as drivers of global growth.

Brigitte Posch, PIMCO evp and the portfolio manager of the fund, says: "As emerging markets are capturing a bigger slice of global growth thanks to their ongoing economic development and improving creditworthiness, we believe that national infrastructure is a strategically important area of opportunity in the sector. The Emerging Markets and Infrastructure Bond Fund is structured as a truly global offering designed to provide investors access to this sector as the emerging markets become an increasingly important part of their broader asset allocation strategy."

The fund seeks to benefit from PIMCO's deep resources in sovereign debt and corporate credit analysis, and from its experience in the emerging markets debt market. Posch brings 15 years' investment experience in emerging markets, as well as in the rating and securitisation of infrastructure projects. This gives her a first-hand understanding of the nature and complexities of these investments, according to PIMCO.

The fund will be added to the firm's UCITS III Global Investor Series fund range.