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Pimco Turns Defensive As Fed Considers Rate Move Relatively Soon

TedTed
in Fund Discussions
FYI: Pacific Investment Management Co., which runs the world’s biggest actively managed bond fund, says it’s time to reduce risk.
“We continue to stress more defensive themes in portfolio construction,” Scott Mather, chief investment officer for core strategies at the Newport Beach, California-based company, wrote in an e-mail. Pimco is “focused on selective opportunities in mortgages, inflation-linked bonds, and select credit markets,” he wrote.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-10-12/pimco-focuses-on-defensive-themes-in-portfolio-construction-iu7jrz9m

Comments

  • AndyJ
    edited October 2016
    The steepening of the yield curve may be setting up the next great buy in fixed income, at some point down the road.

    Fwiw, Pimco's been defensive on rates in most of their investment vehicles for many months now.
  • Nick_de_Peyster
    The question is - what will the Fed do if the market reacts badly to perceived or actual diminishment of QE? This isn't the first time there's been chatter about normalizing interest rates. In the past the Fed has reacted dovishly to market weakness. Has the Fed now changed its stripes?

    Nick de Peyster
    http://undervaluedstocks.info
  • Mona
    The steepening of the yield curve may be setting up the next great buy in fixed income, at some point down the road.

    Fwiw, Pimco's been defensive on rates in most of their investment vehicles for many months now.

    AndyJ,

    Do you think it is too early to get back into Intermediate Term Munis like VWIUX and FLTMX?

    Mona
  • VintageFreakVintageFreak
    I think US stock markets behave like Japanese Stock Markets.
    I can only hope US policy moves toward creating more equal society since the Stock Market is not going to help people retire going forward.

    I am as much an expert as anyone else and can say anything I want, but should be given the respect as anyone else :-|

    Meanwhile I will keep trying to invest in the present instead of trying to predict the future and attempting to beat the market - a fool's errand.
  • AndyJ
    edited October 2016
    Mona said:


    AndyJ,

    Do you think it is too early to get back into Intermediate Term Munis like VWIUX and FLTMX?

    Mona

    Who knows, Mona, but I wouldn't until the direction flips, at least. Even yesterday, an okay day for rate-sensitive FI, munis were flat while core taxables gained, and there's not a clear sign yet that Treasury yields are topping - could be headed for 2% on the 10y.

    Sept-Nov is supposedly the longest weakest period of the year on average for munis, so that's kind of a caution too.

    Keep in mind this is coming from someone who's really cautious when there's any possible sign of a prolonged downturn in an asset class I typically like ... -- Best, AJ
  • JunksterJunkster
    If the performance of the past three months (a period of rising rates and falling Treasuries and munis) is any preview, the places to be are high yield corporates and bank loan/floating rate funds. I hope rates continue to rise and surprise on the upside. But as mentioned before, hope doesn't work well for traders/investors.
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