pimco head warns of three investment rs

Investors should increasingly be wary of the three “Rs” impacting investment outcomes today and in the near future – recession, repression and risk – according to Marc Seidner, managing director at Pimco.

pimco head warns of three investment rs

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He said in the aftermath of the global financial crisis deleveraging, re-regulation and de-globalisation will act as restraints on potential economic growth for developed world economies.

This in turn will lead to a danger of market interest rates being maintained at record lows for a long time, starving savers to the benefit of borrowers.

Uncertainties surrounding both of these issues have increased risk in markets dramatically and Seidner said this should lead to caution regarding traditional models and asset allocation practices.

"Uncertainty and volatility can be paralysing, and understandably so. But rather than become frozen with fear, now is the time to recognise regime change and consider making structural modifications," he advised.

The top issue investors need to focus on is the strength of balance sheets across the scale, from companies to countries.

Another focus should be on income, particularly in the face of repression through low interest rates.

Finally, price change should not be the only trigger for portfolio change, and a fundamental outlook should be used alongside price analysis in order to inform asset allocation, he said.

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