model. Traditional portfolio strategies typically follow the idea that market returns follow a normal distribution. However, this assumption does not properly reflect market returns, and tail events have a large effect on market returns. Pimco Investments is the distributor of pimco investment products, and any pimco Content relating to those investment products is the sole responsibility of pimco Investments. The normal distribution curve has a kurtosis equal to three and, therefore, if a security follows a distribution with kurtosis greater than three, it is said to have fat tails. Therefore, investors should hedge against these events. Investment Products: NOT fdic insured MAY lose value NOT bank guaranteed. Hedging Against Tail Risk, although tail events that negatively impact portfolios are rare, they may have large negative returns.
In the United States and throughout the world. Delete, you are sharing 0 items: Strategies, strategy Overview, pimco constructs asymmetric hedge overlay portfolios that help clients mitigate portfolio downside risk. However, the concept of tail risk suggests that the distribution of returns is not normal, but skewed, and has fatter tails. Under this assumption, the probability that returns will move between the mean and three standard deviations, either positive or negative, is approximately.7. Pimco is a trademark of Allianz Asset Management of America.P.