The life of as portfolio manager is to always be prepared and that’s not
just for things that can go well but also for things maybe that won’t go as
well. We always want to challenge our conviction. We always want to look
ahead and ask ourselves what could we be missing. Environments are
changing; we think markets are going to become more volatile, so having
that forward view will make us better decision makers. So this is when we
think we’ll thrive. I’m Mark Kiesel, I’m CIO, Chief Investment Officer
responsible for overseeing global credit at the firm.
PIMCO’s bottom up process is a key component of our overall investment
process at the firm. As a portfolio manager I’m very focused on equity
moves, price moves, as analysts they're very focused on fundamentally is
anything deteriorating or improving. That teamwork is really invaluable and
that's how we ultimately come across our ideas, and ultimately what we want
to buy and sell in the portfolios.
We have a top picks and pans meeting every month and it involves a series
of about five or six meetings around the world with over a hundred
portfolio managers and analysts. And that essentially is the roadmap for
all portfolio managers at PIMCO, what to buy what to sell across investment
grade, high yield, bank loans, emerging markets. And in fact a lot of the
alpha at PIMCO has come from this process.
What we pride ourselves on is understanding the details; we want to know
everything. In our credit portfolios we literally have two, three, four
hundred positions so the level and depth of knowledge that's required is
I think some of the most exciting moments for myself at the company have
been with the analysts, visiting the companies and really coming up with
insights that we saw ahead of others. For example we were early and
identified the housing crisis two years before it happened. We thought the
inventory problem would worsen. We thought housing could fall 30%, and
ultimately it ended up happening.
Also, in the recession, when no one wanted to lend to the banking sector,
our analysts were there, helping to essentially recapitalize the banking
industry, and because we were there, we were able to negotiate terms and
get deals into our clients' portfolios.
One of the things that PIMCO benefits from is having a long-term
orientation. As we look out going forward one area of opportunity we do see
is in the global consumer: Incomes are rising and in fact as incomes rise
people tend to spend more. For example the US consumer, consumer spending
accounts for 68% of the economy, in China it's only 53%. China's consumer
will come online, they'll expand their wealth they'll take more vacations
and that more of China's growth will come from the consumer.
But having that forward view gives us a advantage because we ultimately
want to buy companies not based on past results but where they're going.
The beauty of this is that all these companies vary. They’re all in
different industries in different countries. So the ability of active
managers to add value is significant, and that’s something we do at PIMCO.
We have very high standards, we want to deliver not only strong, consistent
performance but also superior service to our clients.
One of the things we always pride ourselves on is that if we’ve had any
success in the past ignore it - wake up every day and earn it, and that’s
something we’re very proud of here at the firm.
Past performance is not a guarantee or a reliable indicator of future
contain risk and may lose value. Investing in the bond market is subject to risks, including market,
interest rate, issuer, credit, inflation risk, and liquidity risk. The
value of most bonds and bond strategies are impacted by changes in interest
rates. Bonds and bond strategies with longer durations tend to be more
sensitive and volatile than those with shorter durations; bond prices
generally fall as interest rates rise, and the current low interest rate
environment increases this risk. Current reductions in bond counterparty
capacity may contribute to decreased market liquidity and increased price
volatility. Bond investments may be worth more or less than the original
cost when redeemed. Management risk is the risk that the
investment techniques and risk analyses applied by PIMCO will not produce
the desired results, and that certain policies or developments may affect
the investment techniques available to PIMCO in connection with managing
the strategy. Investors should consult their investment professional prior
to making an investment decision.
This material contains the opinions of the manager and such opinions are
subject to change without notice. This material has been distributed for
informational purposes only and should not be considered as investment
advice or a recommendation of any particular security, strategy or
investment product. Information contained herein has been obtained from
sources believed to be reliable, but not guaranteed.