Already a subscriber?After 2023 turned out to be a bit of a damp squib for fixed-income investors as central banks kept raising rates to tame sticky inflation, this year Ivascyn, who helps oversee $US1.9 trillion in assets for Pimco, is more confident.
In October, when 10-year US Treasury yields hit 5 per cent on concerns that the US Federal Reserve may need to raise rates again, Pimco increased its interest rate exposure to the highest in a decade with a five-year duration. As an aside, Ivascyn, who has worked for more than two decades at Pimco from the firm’s Newport Beach headquarters, is a devoted fan of Australian rules football and netball, despite the brutal timezone difference.
“It makes sense to begin diversifying into some areas that weren’t exciting for a long time,” Ivascyn says. As for the world’s largest economy, while Ivascyn expects that it will take the Fed a “couple of years” to bring inflation to heel, he says a gradual cooling will allow the central bank to cut interest rates this year.
It’s the reason that his income fund has exposure to US Treasury inflation-protected securities, or TIPS, which offset the effects of inflation “without having to pay much for it”.
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