Fund manager Pimco said it has identified attractive opportunities in fixed income for the year ahead despite the likelihood of moderation in Asian and global economic growth.
“There is a lot of noise out there. A lot of policy noise, a lot of economic noise, a lot of trade noise, there is all sorts of things going on which to us as a manager just represents opportunity,” the firm’s head of portfolio management in Australia Rob Mead said in Sydney.
“We would argue that the sweet spot of this non-inflationary Asian growth is already behind us.
“We have had a great two years of growth out of Asia but now we don’t have the luxury of that strong growth at least for the short-term. We can switch back on in a year or two but for the short-term that very strong stimulus for our economy is behind us.”
He said there were attractive opportunities in areas including Australian credit, the local currency and residential mortgage backed securities (RMBS).
“Australian credit, believe it or not, is priced almost identically to emerging markets credit. It’s cheap and it’s very, very attractive,” Mead said.
He said that the Australian dollar still represented value to Pimco as it was one of the least influenced currencies in the Asian region.
The Australian RMBS market was also attractive because distressed areas of Europe were selling the securities.
“As we see the various countries across Europe have their fiscal issues one of the easiest things for the banks to sell are high quality AAA assets that are liquid enough to find a buyer,” he said.
“So it has almost been a matter of following the European crisis around, making a few phone calls to some strategic owners of those assets in those markets and buying them in the secondary market.”
