The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
Thursday, April 27, 2023|
Pimco Versus the Hushed Whispers of Recession
As recession becomes less of an "if" and more of a "when," one top fund firm executive is turning to high-quality segments of the fixed income market for stability.
In a press briefing, Ivascyn explained that preparing for more volatility from the central bank space is crucial for investors today. However, there is "not an obvious near-term solution" to markets roiled by outside forces, he notes.
Ivascyn told MFWire during the briefing that recent regional bank weaknesses (e.g. First Republic) are far from resolved, and will contribute to economic woes moving forward. "Recession is probably more likely than not, [but] the recession term is a tricky one because it suggests some binary magic, like you're either growing or you're in recession."
"It's hard to talk in multiple dimensions, so we use the term because it's simple and easy to understand," he adds.
What's printed in the papers, Ivascyn says, has a strong impact on investor behavior. In practice, "recession" and "sustained period of very, very low growth" aren't so different — but one is more sensational. In the investment world, the "headline effect" is very real.
Ivascyn notes that while the economy is generally stable, "anytime you have near stall speed growth or even slightly-negative growth, you have this inherent fragility that can lead to even more significant shocks."
The PIMCO team believes that "there is enough value back in the traditional, highest-quality segments in the fixed income markets," Ivascyn adds.
"Sure, you have to give some yield versus more economically-sensitive investments," he says, "but given extreme uncertainty, we think clients should be willing to give up a little bit of return."
Printed from: MFWire.com/story.asp?s=65897
Copyright 2023, InvestmentWires, Inc.
All Rights Reserved