From the threat of growing populism and its economic consequences to the exhaustion of monetary policy options to stimulate growth, rising risks are threatening the stability of global growth over the longer-term. As investors look out across the secular horizon for attractive opportunities, they should keep these three things in mind.
Guard Against Rate Risk: Active management can help guard against negative yields, which we’re seeing in Japan, Europe and other parts of the world, by looking for more attractive global alternatives – and can also help protect against the risk of gradually rising rates over time.
Take a Tactical Approach to Volatility: With volatility likely to be high from a historical perspective, investors should take a tactical and opportunistic approach to structural and targeted volatility sales to take advantage of periods of market overshooting and bouts of transactional illiquidity in markets.
Look for High-Quality Credit and Think Global: The global credit markets are poised to provide attractive opportunities, but careful credit section is key to finding value; investors should look to high-quality exposure, hard asset coverage and seniority in the capital structure and steer away from credits that rely on central bank intervention.
Video: Investing in a Stable But Not Secure World
PIMCO Group CIO Dan Ivascyn and Andrew Balls, CIO Global Fixed Income, discuss the investment opportunities to consider – and risks to avoid – across regions and asset classes over the secular horizon.
Learn more about the macro risks PIMCO sees over the secular horizon on the PIMCO blog.
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