Sonali Pier, Portfolio Manager, Multi-Sector Credit for PIMCO, joined Zoe Hunt, Host of RIA Channel, to discuss the fixed income landscape and where she is finding opportunity.
With a generational reset in yields and elevated base rates, Pier sees a compelling opportunity for fixed income. She explains that higher starting yields can provide attractive forward return potential, generate income, and help portfolios weather volatility. With global dispersion increasing, U.S. growth remaining resilient, and central banks positioned to cut rates if needed, she also sees potential across asset allocation, regions, industries, and individual securities.
Rather than focusing solely on public versus private markets, Pier encourages investors to evaluate whether they are adequately compensated for differences in liquidity, complexity, and economic sensitivity. She also notes the flexibility of public markets to look across capital structures and regions as relative value changes.
As the era of global fragmentation approaches what PIMCO sees as a potential rupture point, Pier emphasizes the importance of resilience in portfolios. She highlights areas benefiting from the AI buildout across investment grade, high yield, securitized credit, and direct lending, as well as industries such as utilities. She adds that agency mortgages can benefit from higher valuations as liquidity improves as the sector gains an implicit government guarantee. Regional differences in emerging market debt are also creating the potential for stronger diversification. In today’s target-rich environment, she stresses maintaining flexibility to pursue tactical opportunities while benefiting from longer-term structural trends.
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