Pacific Investment Management Company (PIMCO) has emerged as one of the biggest group award winners at the Best Funds Awards 2024 by The Edge Singapore, with data from Morningstar. PIMCO took home four awards, for fixed income funds under the global broad category of over and under US$1 billion ($1.36 billion).
The four funds are the PIMCO GIS Global Bond Fund Institutional USD Acc, PIMCO GIS Income Institutional USD Acc, PIMCO GIS Global Bond Ex-US Fund Institutional USD Acc and PIMCO GIS Low Average Duration Fund Institutional USD Acc.
The firm’s competitive edge lies in four key differentiating elements, according to Stephen Chang, managing director and Asia portfolio manager of PIMCO.
Scale and access, and the ability to navigate complex markets with flexibility, are reasons for PIMCO's funds performance. Photo: PIMCO
“Scale and access; our ability to navigate complex markets with flexibility; our consistent and disciplined approach tested over 50 years of out-performance across market cycles; and quantitative rigour where we leverage data-driven tools to enhance and optimise both top-down and bottom-up investment decision-making,” explains Chang.
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The PIMCO GIS Global Bond and PIMCO GIS Global Bond Ex-US funds are core bond strategies with a long-term orientation and emphasis on utilising multiple sources of alpha, according to Chang.
The funds leverage a global opportunity set, benefitting from PIMCO’s views on interest rates, exchange rates, credit and country trends and diversified exposure to major world currencies. The portfolios have the flexibility to actively manage positioning to navigate different market environments while preserving a focus on high quality, he adds.
On the other hand, the PIMCO Low Average Duration Fund employs a core bond strategy incorporating PIMCO’s signature total return philosophy and providing broad market exposure while maintaining a lower sensitivity to interest rate movements and delivering the objectives of capital preservation and liquidity management.
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Chang says it leans on the firm’s philosophy of diversification, employing multiple concurrent strategies so that no single risk should dominate returns.
Meanwhile, PIMCO’s GIS Income Fund is managed to maximise income, says Chang. The fund is benchmark-agnostic and has the flexibility to utilise the entire US$130 trillion global fixed income universe to pursue the best risk-adjusted income opportunities, which diversifies the range of economic environments it can outperform.
“We believe that having an eye on the entire spectrum of fixed income investment opportunities enhances our ability to operate in each individual sector,” he adds.
Chang highlights that the fund also focuses on structural seniority. The higher the debt is on the structure, the more likely an investor will get their money back. Deploying PIMCO’s exhaustive credit research, the fund is also able to steer clear of sectors, security structures or companies that are unsound in PIMCO’s view.
Chang believes that an economic soft landing remains achievable in the US, as market pricing for both equities and the US Fed’s terminal policy rate appears to largely rule out a possibility of recession.
Amid this uncertainty, Chang says bonds offer attractive nominal and inflation-adjusted yields, plus the potential to weather a variety of economic conditions.
“Given today’s flat yield curves, we believe intermediate maturities can offer a sweet spot between cash and long duration bonds,” he says.
Bond markets outside the US are particularly attractive — Chang favours the UK, Australia and Canada. He also favours the US dollar over the Euro and other European currencies, and US agency mortgage-backed securities and other high-quality assets for their attractive yield and return potential.
“With interest rates elevated, we see greater pressure on both corporate borrowers and traditional lenders such as banks. Within private markets, we see increasing opportunities in asset-based and speciality finance.”
