Text on screen: PIMCO
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Text on screen: Daniel J. Ivascyn, Group Chief Investment Officer
Given the recent rise in U.S. interest rates, many financial advisors and their clients are concerned about the evolution of the rate environment and how they should consider positioning their portfolios given these recent trends.
At PIMCO, we share these concerns. We currently are positioned fairly defensively regarding interest rate exposure across portfolios. Nearly all the portfolios that we’re operating are currently underweight duration relative to their benchmark. We’re in more absolute return oriented strategies, on the defensive side of overall interest rate exposure relative to their history.
Although there will be a time to add back duration or interest rate exposure, we simply think the next few months are going to be prone to considerable uncertainty on the inflation front. The potential elevated risks of inflation, surprising to the high side. And given current interest rate levels, we don't think you get paid quite enough to be operating from a neutral or certainly an overweight position.
We’ll be monitoring the data very very closely to the extent that our forecast suggests more accelerated downward trend in some of these pressures and ideally, if the interest rate selloff continues, and we end up with better valuations, we’ll certainly adjust our position accordingly.
But the bottom line at the moment at least, we think it makes sense to be defensive, makes sense to reserve more flexibility for better entry points or better opportunities in the weeks and months to come.
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Please note that the following contains the opinions of the manager as of the date noted, and may not have been updated to reflect real time market developments.
Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
All investments contain risk and may lose value. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. There is no guarantee that desired results will be achieved.
This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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