Pimco chief investment officer for US core strategies Scott Mather said investors need to take a considered approach to portfolio management following the election of Donald Trump last week.
“We believe it’s important, especially in tumultuous times like this, for investors not to focus entirely on the downside, but to take a much more balanced view,” he said.
Given the increase in uncertainty around near-term markets, Mr Mather said scenario analysis was critical to portfolio management, adding that investors need to “gather and assess information” before taking any stance on long-term investments.
“Specific to the post-election environment, we see a number of potential positives over the medium term as well as some potential negatives; it will be important to analyse the policy as it’s unveiled and make investment decisions accordingly,” he said.
Mr Mather encouraged investors to “consider a more defensive posture” given the rising volatility and uncertainty in markets, which he said would create opportunity as well as risk.
“Volatility will likely increase substantially from the generally low levels we saw over much of this year. Central bank policy probably won’t limit volatility to the extent it has over the past several years, and we see potential for widening risk premia and credit spreads,” he said.
“Both near term and also over the longer term, investors may want to position for higher inflation.”
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