Investment Strategies

Getting a Read on the Business Cycle

Three main economic indicators can inform where we are in the business cycle. Portfolio Manager, Multi-Asset Strategies Erin Browne discusses how these factors influence PIMCO’s asset allocation decisions.

More from this section

Read Transcript

There are three main factors that PIMCO uses to assess the business cycle. The first is changes in growth, the second is changes in inflation, and then lastly, changes in financial conditions. We think that it's really important to focus in on these three characteristics of the business cycle because they're really important in informing us how we should trade and how we should align our asset allocation portfolios.

As we move later business cycle, keeping an eye on the recession risks and the recession probabilities in our models is also really important, and although we think that the recession probability over the next 12 months is in the 20 to 30 percent range, as this indicator starts to pick up and we see recession probabilities increasing meaningfully, it will inform our decisions from an asset allocation perspective.

Also, as you move later business cycle, volatility tends to pick up within portfolios, and this makes it increasingly more difficult to perform with a buy and hold strategy. So being nimble, being dynamic is really important, and this is why we think at this point in the cycle it's really important to have dynamic asset allocation managers who can properly align your portfolio given the risks at hand.  

As a result of this, I think it's really important to remain actively managed within your asset allocation portfolio to take advantage of some of the idiosyncratic risks that emerge as we move later cycle and throughout a higher volatility environment.

Disclosure


All investments contain risk and may lose value. 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.

There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. 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. Forecasts, estimates and certain information contained herein are based upon proprietary research 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.

CMR2019-0219-382065

Filters:
Filters: Reset All

Filters

X
  • Topic/Tag

    Tags

    Reset

    Close
  • Category

    Category

    Reset

    Economic and Market Commentary
    Investment Strategies
    Bond by Bond
    Viewpoints
    Careers
    Education
    PIMCO Foundation
    View from the Investment Committee
    Close
  • Order By

    Order By

    Reset

    Alphabetical
    Most Recent
    Close
() filters applied

Multimedia Finder

Filter By:
Section
  • Economic and Market Commentary
  • Investment Strategies
  • Bond by Bond
  • Viewpoints
  • Careers
  • Understanding Investing
  • View from the Investment Committee
Experts
  • A
  • B
  • C
  • D
  • F
  • H
  • I
  • K
  • M
  • P
  • R
  • S
  • T
  • W
Clear
Tina Adatia
Fixed Income Strategist
Olivia A. Albrecht
Executive Office, ESG Business Strategy
Mike Amey
Head of Sterling Portfolio Management and ESG Strategies
Yacov Arnopolin
Portfolio Manager, Emerging Markets
Francesc Balcells
Portfolio Manager, Emerging Markets
Andrew Balls
CIO Global Fixed Income
Justin Blesy
Asset Allocation Strategist
David L. Braun
Head of US Financial Institutions Portfolio Management
Erin Browne
Portfolio Manager, Multi-Asset Strategies
Libby Cantrill
Executive Office, Public Policy
Richard Clarida
Former Global Strategic Advisor, 2006-2018
Anna Dragesic
Head of Global Credit Product Strategies
Joachim Fels
Global Economic Advisor
David Fisher
Head of Traditional Product Strategies
Mary Hoppe
Daniel H. Hyman
Head of Agency MBS Portfolio Management
Daniel J. Ivascyn
Group Chief Investment Officer
Mark R. Kiesel
CIO Global Credit
Naila Makhdumi
Account Manager, Global Wealth Management
Jason Mandinach
Credit Strategist, Mortgage Strategies
Scott A. Mather
CIO U.S. Core Strategies
Lalantika Medema
Alternative Credit Strategist
Mohit Mittal
Portfolio Manager, Liability Driven Investment and Credit
James Moore
Consultant
John Murray
Portfolio Manager, Commercial Real Estate
Sonali Pier
Portfolio Manager, Multi-Sector Credit
Lupin Rahman
Head of EM Sovereign Credit
Emmanuel Roman
Chief Executive Officer
Loren Sageser
Credit Strategist
Steve Sapra
Client Solutions & Analytics
Jerome M. Schneider
Head of Short-Term Portfolio Management
Marc P. Seidner
CIO Non-traditional Strategies
Sapna Shah
Head of Corporate Responsibility
Anmol Sinha
Fixed Income Strategist
Cathy Stahl
Global Head of Marketing
Christian Stracke
Global Head of Credit Research
Geraldine Sundstrom
Portfolio Manager, Asset Allocation
Richard Thaler
Distinguished Service Professor of Economics and Behavioral Science at the University of Chicago's Booth School of Business
Jessica K. Tom
Senior Credit Analyst
Niamh Whooley
ESG Engagement Analyst
Tiffany Wilding
U.S. Economist
Andrew T. Wittkop
Portfolio Manager, Treasuries, Agencies, Rates
Mihir P. Worah
CIO Asset Allocation and Real Return
PIMCO
Order By
  • Alphabetical
  • Most Recent
Section : Date : Experts :
Reset All

Load more results Load {{cCtrl.fetchResults}} more results