NEW YORK (Reuters) - Pacific Investment Management Co said it will launch a new global fixed-income and currency fund on Thursday, underscoring investors’ appetite for comprehensive diversification and downside protection.
The fund from PIMCO, which is the world’s biggest bond investment manager, will invest in a broad range of currencies through foreign-denominated debt and plain currency exposure as well as fixed-income securities and instruments, such as corporate bonds and inflation-protected bonds.
“We continue to believe that a selective global positioning is the way to go,” Mohamed El-Erian, chief executive officer at Pimco, which oversees $747 billion in assets, told Reuters in an interview. “The driver of this fund is the recognition that investors require an expanded tool kit to navigate these rapid changes in the global economy.”
The new fund, Pimco Global Advantage, emphasizes sectors and securities that are supported by sound fundamentals and have the “tailwind” of government support, El-Erian said.
“This is not a ‘spread it like peanut butter’ approach, nor is it a ‘pedal to the metal’ risk approach,” he said. “It is a much more selective positioning across multiple currencies, multiple countries, and multiple sectors.”
The fund will be benchmarked against the newly rolled out PIMCO Global Advantage Bond Index, or Gladi, whose weightings of regions and their securities are calculated by their gross domestic product.
This will help capture opportunities in the debt securities and instruments of governments and companies that are accounting for an increasing share of the world’s growth, El-Erian said.
Three years ago when nearly every market in the world was producing healthy returns, El-Erian said the resulting higher prices for stocks and bonds suggested a puzzling complacency. El-Erian characterized world markets and economies in a state of “stable disequilibrium,” which would eventually unravel.
Evidently, they did but investment opportunities have emerged, he said. “The origin of the new fund and index was in the notion that we were in a fundamental disequilibrium that, at some point, would play out,” El-Erian said.
The fund will be co-managed by El-Erian and executive vice president Ramin Toloui.
Editing by James Dalgleish