PIMCO: It’s time to embrace lower rates

James Marlay

Livewire Markets

For some, the RBA’s most recent policy move, pegging rates at 0.1%, was a tipping point in their realisation that low rates are here to stay. For Robert Mead, who heads up portfolio management in Asia Pacific for PIMCO, it was another proof point in the ‘lower for longer’ view the global bond behemoth has been pushing for a decade.

While nobody wants to earn 10 basis points, Mead says the scale and the opportunity set that lies within global bond markets is staggering and with that scale comes opportunity. To unlock better yields PIMCO is remaining active in credit markets and investing in less liquid opportunities, where a premium rate can be achieved for those willing to lock up their capital.

I recently spoke with Robert to understand where he is finding yield, his views on inflation and why he reckons the bond bears have gone quiet.

Despite the fact that interest rates are at all time lows, or very close to, there's very few bond bears left. There was lots of noise around being wary of bonds and it sort of all dissipated. Which is quite peculiar given the level of rates.

Discussion points

  • Where have all the bond bears gone?
  • Taking advantage of the policy tailwinds supporting markets
  • Sectors in the credit markets that are presenting opportunities for fixed income
  • Investing for illiquidity premium and why this remains underrepresented in portfolios
  • The slow burn on distressed opportunities
  • Thinking about inflation and some of the different ways fixed income can navigate an inflationary environment
  • Robert shares an incredible stat for Livewire readers 

Click on the player to watch the interview.

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