Pioneer Funds: Multi-Asset Income and Pioneer Fund Q2 2024 Performance Analysis

Pioneer Multi-Asset Income Fund Performance And Market Commentary

Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, fund performance would be lower. Waivers may not be in effect for all funds. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. During the second quarter, the MSCI All Countries World Index and the MSCI World Index returned 2.87% and 2.63%, respectively. At a regional level, U.S. stocks returned 4.28%, Japan returned -4.27%, European stocks finished flat at 0.55%, and Emerging Markets enjoyed strong returns at 5.00% (represented by the S&P 500 Index, the MSCI Japan, Europe and Emerging Markets Indices, respectively). Bond returns diverged as broad indices such as the Bloomberg Global Aggregate Index returned -1.10%. However, spread sectors, including high yield, were positive, returning 1.04%, as investor appetite for risk remained durable. Market sentiment during this period was influenced by various factors, resulting in significant divergences across different investment styles, market breadth, and geographical regions. Investors were closely monitoring global economic data, as the future direction of interest rates and inflation remained uncertain. Additionally, increasing geopolitical risks had a negative impact on stocks across many economic regions. In the U.S., there were surprises in both consumer and producer inflation Indices, with inflation trending lower. However, concerns about the overall health of the economy began to emerge. Reduced growth and inflation expectations led to a decline in benchmark rates throughout the quarter, with the 10-year U.S. Treasury falling from a high of 4.70% in April to 4.36% by the end of June. Furthermore, the market saw a surge in enthusiasm for artificial intelligence, causing investors to overlook valuation concerns and favor select growth stocks, such as Nvidia (NVDA)*, which was the most highly valued stock, in terms of market capitalization, in the S&P 500 Index (SP500, SPX) for the quarter. This resulted in a narrow market breadth, with the market-weighted S&P outperforming the equal weighted S&P by more than 6%. European equity performance was lackluster, as business activity unexpectedly declined, as indicated by both the services and manufacturing PMI indicators. Additionally, volatility in European markets was driven by President Macron's call for elections in response to European Union elections, which increased political uncertainty in the region. In Japan, investor enthusiasm waned due to speculation about the direction of the Bank of Japan's monetary policy normalization. Slowing economic data in the services sector, coupled with rising inflation and interest rates, further dampened demand for equities during the quarter. Pioneer Multi-Asset Income Fund Class Y returned 0.11% during the second quarter while the Fund's benchmarks, the Bloomberg US Aggregate Bond Index returned 0.07%, and the MSCI All Country World Index returned 2.87%. Portfolio performance came under some pressure given the intensifying concentration in the indices due to the outsized performance from select growth stocks during the period. Thus, the Portfolio's current value style bias was the largest detractor to relative performance during the period. In addition, strong performance at the equity index level impacted the Fund's hedges that are designed to reduce the equity risk to the Fund from the equity-linked notes. However, given attractive coupons in the equity linked notes, we believe we have been adequately compensated for the performance drag of the hedges during the period. Despite the Portfolio's value tilt, specific stocks in the energy sector including the master limited partnership ('MLP') exposures were among the largest contributors. Other allocation decisions that impacted the portfolio favorably included positions within the equity linked notes and securitized credit. From an economic perspective, we believe the global economy is currently in a better position compared to the consensus view from a year ago. In the U.S., there has been no recession, and in Europe, economic numbers have been quite strong after a period of weaker performance. In Asia and China, signs of a rebound have been more evident, and the outlook appears more favorable than it did a year ago. However, there has been a noticeable slowdown in economic data more recently, with a decline in inflation and GDP growth. In the U.S., the private sector of the economy is slowing down, and the consumer, who is a key driver of the U.S. economy, has been gradually weakening. For example, retail sales are indicating lower annualized growth in the economy. Additionally, the inverted yield curve between the 10-year Treasury and the 3-Month T-bill suggests that the market still perceives a risk of further economic slowdown. Market volatility and divergences in equity performance have increased as expectations for interest rate cuts later in the year have consolidated across the world. Typical of late-cycle conditions, equity performance has shifted towards U.S. stocks, particularly those in less cyclical sectors. However, in our view, this may not be the appropriate reaction given the current valuations in the U.S. market. The valuation of the market is a fact, not a forecast, and the U.S. market is currently very expensive relative to its historical levels. With recent market performance in the "magnificent seven" (Alphabet, Apple, Nvidia, Amazon, Microsoft, Meta Platforms and Tesla) 1 these stocks account for over 30% of the weight of the S&P 500 but only 23% of the earnings. On the other hand, the financials sector represents 12% of the index, but genera ted over 17% of the earnings and represents a compelling opportunity in this environment. The Portfolio structure has not been materially altered over the course of the quarter, but instead have made some security selection changes. In light of our current macro-economic views and market valuation the Portfolio continues to express a more conservative posture, while concurrently seeking to generate income in-line with portfolio objectives. While a market correction may not be imminent, we believe it is important to be positioned for this by adhering to our philosophy of investing in securities with strong balance sheets and attractive income and valuation characteristics. For example, the fixed income holdings are focused on higher quality agency mortgage-backed securities where technical factors have led to deep discounts and attractive yields. These seasoned mortgages have possessed reduced credit risk characteristics, thus representing a striking potential opportunity for income generation, in our view. Furthermore, due to compressed spreads, and later cycle conditions, the Portfolio's allocation to high yield bonds remains at historic lows. As part of our process, we constantly assess "are we being properly compensated for the risk we are taking," and we are finding income opportunities with a more favorable risk/reward ratio in other asset classes including equity-linked notes. Equity linked note (note) positions have been refreshed over the course of the quarter as older notes have matured. For the notes, a 20% allocation represents a full weighting within the Portfolio, and recent reallocations have kept exposures close to these levels. During the year, as the S&P 500 Index has grown more concentrated, the overall volatility surface that has been observed has steadily declined which appears to be creating resistance across the category. However, our identifiable selection of individual securities for overwriting has remained relatively immune from this phenomenon, and yields have persisted. Consequently, the Portfolio hedges have been maintained aiming to reduce the equity risk present within the equity-notes sleeve as well as to de-risk the Portfolio at a systematic level. In our view, this is prudent particularly in light of market concentration and current valuations in U.S. equity indices. Flexibility and diversification 2 remain important features of our process as we seek to deliver a high level of income and modest capital appreciation over the course of a market cycle. The remaining allocation is diversified across global equities, and other fixed income sectors including securitized credit, insurance-linked securities (catastrophe bonds), investment grade corporate bonds, mortgage REITs, and emerging market sovereigns. Based on the Portfolio's history, the net equity exposure within the Portfolio remains relatively low, and remain underweight the mega-cap growth stocks where valuation remains a concern, and the opportunity for dividends 3 is insignificant. We favor equities of companies that aim to deliver earnings in this more challenging operating environment with higher rates and inflation. In Europe and Asia, despite continued weak economic output, we have invested in an array of companies with what we view as very attractive valuations relative to their earnings power. This includes a higher weight to over-capitalized banks that focus on traditional banking services and have reduced exposures to commercial real estate or other credit concerns. Lastly, MLPs have been an important source of income generation for the portfolio given their utility like structure where yields are a by-product of pipeline throughput rather than the underlying price of the commodity. The fundamentals of this space have remained strong given improved coverage ratios and reasonable valuations. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Pioneer Fund Q2 2024 Performance Analysis And Market Commentary

Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, fund performance would be lower. Waivers may not be in effect for all funds. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. The S&P 500 Index (SP500, SPX) returned 4.28% in the second quarter, on the back of continued enthusiasm for artificial intelligence ('AI') and the Magnificent 7* stocks (Alphabet, Apple, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla). Companies related to the AI theme performed exceptionally well, with a return of more than 14% in the quarter, while the rest of the market had a negative return (-1.2%), according to FactSet. Six of the seven Magnificent 7 stocks outperformed in the quarter, with only Meta Platforms (META) underperforming the SPX. Nvidia (NVDA) alone contributed more than 30% of the SPX return. The outperformance of the Magnificent 7 caused the SPX to outpace the returns of the average stock in the quarter. The S&P 500 Equal Weighted Index, which measures the performance of all stocks equally, returned -2.63%. Growth stocks continued to outperform value stocks, with the Russell 1000 Growth Index (RLG) returning 8.33%, compared to the -2.17% return of the Russell 1000 Value Index (RLV). Year-to-date, the SPX returned 15.29%, with 31 record closing highs during the period. The strong performance of the SPX was driven by a combination of rising stock valuations as measured by price-to-earnings (P/E) multiples along with better-than-expected earnings (most notably, from Nvidia). The Russell 1000 Growth Index (RLG) outperformed the Russell 1000 Value Index (RLV), with returns of 20.70% and 6.62% respectively, largely due to sustained enthusiasm for artificial intelligence ('AI'). Pioneer Fund's Class Y Shares returned 6.45% for the second quarter, substantially outperforming the 4.28% return of the SPX. Consistent with our fundamental, bottom-up approach, the performance in the quarter was primarily driven by security selection, with sector allocation decisions detracting slightly from benchmark relative returns in the period. From a sector perspective, the Portfolio's security selection within health care, consumer staples, and materials, where the Portfolio benefitted from its position in copper miners, were the largest contributors to performance. However, the Portfolio's overweight position in the underperforming materials sector detracted modestly from the Portfolio's outperformance. Despite the strong performance from copper miners, the overall exposure to materials, especially building materials, weighed down the Portfolio's performance in this sector. Top contributors included BJ's Wholesale Club (BJ), which rose after reporting better than expected quarterly results. BJ's benefited from market share gains and unit growth as the frequency of customer trips to stores increased. The Portfolio has built up its position as it has reduced exposure to Costco, a competitor that trades at a higher valuation. Arista Networks (ANET) was a significant contributor to our Portfolio's performance, as the cloud-networking provider reported strong results in its March quarter and provided a positive outlook for the future. In our view, Arista's exposure to AI has been a key driver of its share price growth in 2023 and 2024, as investors recognize the importance of their network switches in supporting the expansion of generative AI platforms. We believe that Arista's shares present an appealing risk-reward profile, given the potential substantial opportunity presented by the rapid adoption of AI technologies and the critical role that Arista plays in AI networking. Detractors included Martin Marietta Materials (MLM), which retreated after a strong start to the year on the back of favorable aggregates pricing and financial results. The fall in the period was mainly due to weather related concerns. We trimmed the stock earlier in the year on strength, but remain invested as US infrastructure spending should provide a long-term growth tailwind, in our view. Another detractor was U.S. Bancorp (USB), which declined as company guidance for net interest income was below expectations. We believe net interest income margins are likely to recover due to higher pricing on earning assets. This recovery coupled withcost controls could potentially result in earnings growth, which we believe will cause shares of the stock to move higher. In the year-to-date period, the Fund returned 19.25%, again substantially outperforming the 15.29% return of the SPX mainly due to two reasons: (1) exposure to the AI theme, including an overweight to semiconductors and most prominently Nvidia and (2) an underweight to select Magnificent 7 stocks, such as Apple for valuation reasons, and lack of exposure to Tesla due to increasing competition and lack of innovation. On the other hand, our performance was negatively impacted by our security selection in financials and communication services, in part due to our exposure to underperforming banks. Top Relative Detractors and Contributors - Second Quarter 2024 Top 10 Holdings (as of June 30, 2024) We are not sure when or if the long-anticipated recession will occur, but we believe there is value in cyclical areas of the market, such as financials, materials, and to a lesser extent semiconductors. In financials, we continue to favor regional banks, but have also added exposure to some larger banks and financial services companies with exposure to capital markets. We have reduced some of our information technology exposure, and particularly our semiconductor positions given their strong performance. However, AI continues to be a dominant theme in the technology sector and the Portfolio overall, as we continue to allocate towards the creators, implementers and aggressive adopters of AI technologies. In materials, we maintain a preference for stocks that are benefitting from the trend towards electrification and the green energy transition, such as copper mining and building materials. Notable underweight positions include the consumer sectors (staples and discretionary), communication services, and health care, though we have added to the Portfolio's exposure to pharmaceuticals in recent periods. Finally, the Portfolio continues to have no exposure to real estate and utilities, which are interest rate sensitive. Notable changes in the quarter included a reallocation in the industrials space as the Portfolio added to its transportation exposure while decreasing exposure capital goods. We also decreased our materials positions on valuation, mainly in the copper mining segment, due to valuation concerns and an uncertain outlook over the medium-term; although we maintain a large overweight to the sector overall. The Portfolio increased its position in information technology where the team believes valuation has become more attractive. Finally, we continued to add to our exposure to pharmaceuticals and financials. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.