Speaking to InvestorDaily, PIMCO senior vice president and product manager Lisa Kim said the firm’s high-conviction portfolio themes are being packaged as part of a more ‘unconstrained’ strategy – a theme that was highlighted in a recent Zenith Investment Partners review of the sector in Australia.
“We’re finding solutions to strategies that really draw upon the manager’s active management – as opposed to market beta – to drive future performance of a bond portfolio,” said Ms Kim.
The US Federal Reserve’s tapering of its quantitative easing program will have a “profound impact” on the markets that PIMCO’s managers have been investing in, she said.
“Once you remove this bid – this chronic non-economic buyer demand – then there’s going to be potential revaluation in those particular asset classes,” said Ms Kim.
PIMCO is developing strategies to navigate the upcoming challenging fixed income environment, she said.
“One of the core tenets of our approach is the flexibility: that extra flexibility to navigate the fixed income environment as well as be able to exploit opportunities and take advantage of the more temporal mispricing,” said Ms Kim.
“In this world of expensive betas, absolute return bond strategies represent an effective way to generate income while at the same time providing investors access to multiple sources of alpha,” she said.
“We’re looking at strategies that diversify generic risk portfolios and recognising that it will be a much more uncertain, volatile market place going forward,” said Ms Kim.
