During a discussion on bonds, PIMCO’s director and portfolio manager David Braun said we’re “on the precipice of the most well-telegraphed recession in history.” So, “investors should be looking to build resilient portfolios.”
“We think it’s prudent for investors to focus on building resiliency in their portfolio,” Braun said at Exchange 2023. “And that means adding bonds to their portfolio.”
He added: “After the worst year in the history of bonds, a lot of folks are afraid of bonds.” However, “when the bond fund goes down, it’s because the yields in the fund went up.”
So, with rates pushing yields up higher, Braun said that the opportunities in the bond market are “the most attractive” they’ve been “in decades.”
“You don’t have to be a hero and reach for high yield or riskier securities,” he said. “You can build a high-quality portfolio and get a yield of 5% to 6%, solidly investment-grade. And that should be something that you want to be owning in this environment where the outlook is uncertain and recession risks are elevated.”
Bonds Positioned for Resiliency
Within PIMCO’s suite of actively managed fixed income ETFs, Braun recommended the PIMCO Active Bond ETF (BOND ). The active ETF tracks the Barclays Aggregate Bond Index. And at the time of the interview, BOND was yielding north of 5%.
“It’s right there in that middle of the duration distribution,” Braun said. “We have a position for resiliency.”
The PIMCO portfolio manager added that BOND “should be considered by clients who need a high-quality bond fund to get them through these turbulent times.”
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