It would take until the year 2022 for the global economy and market to fully recover, according to Pacific Investment Management Company, LLC (PIMCO), one of the world’s premier fixed income investment managers.
“The road to recovery will be a long climb up the stairs and we don’t believe the level of economic activities will return to pre-crisis level until the year 2022 in spite of some recent recovery in the high frequency economic data,” said PIMCO Singapore Senior Vice President and Account Manager Kang Min Lin during the webinar, Market Outlook: Risk, Recovery, and Reality. The event was sponsored by Allianz PNB Life, HSBC, and PIMCO.
Several factors are behind this “long climb up” as uncertainties will be heightened in the next 12 months. Some sectors might still operate below capacity due to social distancing. With impaired global supply chains, reopenings will likely be uneven across countries, regions, and sectors.
Lin added that time is also needed to reallocate labor and capital from weaker to stronger sectors and debt overhang will likely weigh on personal and corporate spending.
“Even though we do recover, we expect a U-shaped recovery contingent with the discovery of a vaccine,” he said. “With this economic backdrop, what should investors consider in making investment decisions?”
PIMCO’s 3C Framework to Investing
“PIMCO developed the 3C Framework as a way to help our investors and clients organize their various considerations given the uncertainty of the world economy and markets,” Lin shared. “What we’re trying to avoid is to overwhelm our clients with investment solutions, without having the opportunity to help them understand what they should do to achieve their investment objectives.”
The first C refers to calm.
“What should you do to incorporate more defensive elements in your investment portfolio? Some investment strategies that one could consider is allocation to government bonds,” Lin said.
The second C stands for calibrate and involves a yield and return orientation, high quality bias, and dislocation with limited impairment risk.
The third C is capitalize and it is about seeking attractive liquidity as well as dislocated and stressed opportunities.
A Fund that has the potential to Maximize Total Returns Consistent with Prudent Investment Management
Recently, Allianz PNB Life has introduced the Peso-Hedged Diversified Income Dividend Paying Fund, which is designed for investors looking for regular income with just the right amount of risk.
The fund will be invested in the PIMCO Funds: Global Investors Series plc – Diversified Income Fund (“Diversified Income Fund”) managed by PIMCO, which is an independent subsidiary of the Allianz Group.
“We do believe with this, we further drive our ambition to have first-class international financial solutions available here in the Philippines as we give you access via Allianz PNB Life, and through the Allianz Group globally, to the expertise of our (PIMCO) colleagues, and provide you with opportunities to diversify your investment and have informed investment decisions going forward,” said Allianz PNB Life President and CEO Alexander Grenz.
Available to premier clients of HSBC, the Peso-Hedged Diversified Income Dividend Paying Fund offers potentially attractive risk-adjusted returns by investing across a wide spectrum of global credit opportunities based on investment calls by PIMCO’s reputed portfolio managers. Peso funds will be invested in an underlying dollar-denominated fund investment.
For added protection, the fund will have hedging mechanism by locking in the dollar-to-peso exchange rate on investment date, to minimize exchange rate fluctuations.
Grenz said dividends will be paid out every quarter to investors as of the record date, which is the 22nd of the last month of the quarter.
“With PIMCO, you have an excellent choice of investing and securing the future of your financials,” Grenz said.