Accounts & Products

Fixed Income Strategies

Schwab offers short-term, intermediate, and long-term fixed income managed accounts, as well as bond ladder managed accounts. All are competitively priced and professionally managed by leading third-party investment managers, including PIMCO.

What do I get?

With Managed Account Select® at Schwab:

Access over 75 investment strategies from professional third-party asset managers.
All asset management firms are rigorously screened by Schwab.

With PIMCO Municipal Bond Ladder managed accounts:

Access five professionally managed strategies, available only at Schwab, that seek to generate income by leveraging opportunities in the muni bond market.
These accounts can also help you minimize the effect of interest rate fluctuations.

What are the fees and minimums?

Investment minimum: $250,000
Annual fee: 0.25%—0.65%, depending on account size

Ready to get started?

Call
800-435-8101.

Name	Benefits	Minimum Investment	Annual Fees
Managed Account Select Fixed Income Managed Accounts	Professional management Generate short-term or long-term income More than 75 investment strategiesfrom over 45 third-party asset managers	$250,000	Under $500,000: 0.65% $500,000$–1,000,000: 0.60% $1,000,001–$2,000,000: 0.57% $2,000,001–$5,000,000: 0.55% $5,000,001–$10,000,000: 0.50% Over $10,000,000: 0.45%
PIMCO Municipal Bond Ladder Separately Managed Accounts	Professional management Bond laddering, which can help minimize the effect of interest rate fluctuations Bonds mature at staggered future dates Careful credit analysis by PIMCO, a respected fixed income firm	$250,000	Under $1,000,000: 0.35%² $1,000,001–$5,000,000: 0.30%² Over $5,000,000: 0.25%²

What is bond laddering?

Bond laddering is a strategy that can help minimize exposure to interest rate fluctuations. Instead of buying bonds that are scheduled to come due during the same year, you purchase bonds that mature at staggered future dates.

What are the benefits of PIMCO Municipal Bond Ladder strategies?

Laddered portfolios. PIMCO selects investment-grade municipal bonds with an average credit quality rating of A+ or better, with no individual issue rated below A– at purchase. These are assembled in laddered portfolios with 1- to 6-year, 1- to 12-year, or 1- to 18-year maturity rungs.
Periodic income generation. The strategies seek to generate tax-efficient, periodic interest payments, which can be distributed as they accrue¹ or reinvested into new bonds in the ladder. Of course, investing in bonds carries risks, including the risk that a bond may fail to pay interest or principal, and the risk that it may lose value.
Professional bond selection and management. PIMCO is a highly respected U.S. bond management firm that offers expert municipal bond selection and replacement.
Ongoing credit monitoring. PIMCO selects investment-grade municipal bonds and regularly monitors the credit quality of your account holdings.
Bond replacement. When a bond matures, PIMCO will reinvest the principal by purchasing a new bond, typically at the longest maturity range or “rung” of the ladder. The ladder is extended until you request a payout of principal or your account balance falls below the $250,000 minimum.
Direct ownership and transparency. Unlike fixed income mutual funds, a municipal bond ladder offers direct ownership of the underlying bonds.

What strategies does Schwab offer?

National and California state strategies are available:

PIMCO 1–6 Year Municipal Bond Ladder Separately Managed Account
PIMCO 1–12 Year Municipal Bond Ladder Separately Managed Account
PIMCO 1–18 Year Municipal Bond Ladder Separately Managed Account
PIMCO 1–12 Year California Municipal Bond Ladder Separately Managed Account
PIMCO 1–18 Year California Municipal Bond Ladder Separately Managed Account

Can I see an example of bond laddering?

The following is an example of bond laddering:

Initially, you invest $20,000 each in a one-year, two-year, and three-year bond paying 5%, 5.25%, and 5.5%, respectively.
At the end of the first year, you invest the proceeds from your 5% bond and buy a 5.5% bond, which matures in three years.
At the end of the second year, you invest the proceeds from your maturing 5.25% bond and buy a 5.5% bond, which matures in three years.

Because you are able to invest a portion of your money each year, you are less exposed to interest rate fluctuations. In the example above, your average return goes from 5.25 percent in the first year to 5.5 percent in the third year.

Take the next step.

Call 800-435-8101 or visit a local Schwab branch.

Compare all Schwab managed accounts.
Find out more about equity managed accounts.
Find out more about diversified managed accounts.

Investments in managed accounts should be considered in view of a larger, more diversified investment portfolio. Please read Schwab’s disclosure brochure for important information and disclosures relating to managed accounts at Schwab.

Services may vary depending on which asset managers you choose, and are subject to an asset manager’s acceptance of the account.

1. Accounts must have a balance of $300,000 or more to elect income distributions. Individual municipal bonds may not be tax-advantaged, depending on the bond issuer and your state of residence. Bonds issued in U.S. territories are exempt from federal and state taxes.

2. Please note that fees shown above are blended. Fees are directly deducted quarterly. Separately managed account fees include Schwab’s commissions and PIMCO’s investment management fees, but do not include dealer markups/markdowns or other fees and expenses as described in Schwab’s disclosure brochure. The asset-based fee covers management fees and trade executions by Schwab. It does not cover (i) certain costs or charges imposed by third parties, including odd-lot differentials, American Depositary Receipt fees, exchange fees, and transfer taxes mandated by law; (ii) charges for special services elected by you, including periodic distribution fees, electronic funds and wire transfer fees, certificate delivery fees, and reorganization fees; (iii) dealer markups and markdowns on fixed income securities; and (iv) execution of transactions in securities by other broker-dealers.

PIMCO

Individual municipal bonds may not be tax-advantaged depending on the bond issuer and your state of residence. Bonds issued in U.S. territories are exempt from federal and state taxes.

Bond prices rise and fall daily, and municipal bonds are subject to various risks, including changes in interest rates, call risk, market conditions, and default risk. As interest rates rise, bond prices usually fall, and with them the value of your bonds. Bonds in the portfolios may be purchased at a premium, which may result in realized losses. Some municipal bonds may be difficult to sell. A bond issuer may be unable to make interest or principal payments, thereby resulting in a default. If this happens, the bond may have little or no value. The interest on municipal bonds may be determined to be taxable after purchase. Bond ladders focused on California municipal bonds are more susceptible to political, economic, regulatory, or other factors affecting issuers of California municipal securities, including an eroding tax base and budget and cash deficits.

The PIMCO Municipal Bond Ladder strategies are available through Schwab’s Managed Account Connection™ program (“Connection”). Please read Schwab’s disclosure brochure for important information and disclosures relating to Connection and Schwab Managed Account Services™. In addition, please read PIMCO’s Form ADV or brochure for important information and disclosures. Investments in managed accounts should be considered in view of a larger, more diversified investment portfolio. Bonds in the PIMCO Municipal Bond Ladder strategies may have a rating as low as A– at time of purchase. The strategies may hold callable bonds, which may increase interest rate risk exposure.

Charles Schwab & Co., Inc. ("Schwab") and Pacific Investment Management Company LLC ("PIMCO") are separate and unaffiliated companies.