Introducing PIMCO’s Balanced Income and Growth Strategy (P-BIG)
Shelby: Hello, my name is Shelby Pope, Product Strategist here at PIMCO. With me are PIMCO Asset Allocation portfolio managers Emmanuel Sharef and Erin Browne. Today we are diving into the PIMCO Balanced Income and Growth Strategy, or P-BIG.
Shelby: Emmanuel, what is the P-BIG strategy?
Emmanuel: P-BIG is an active investment strategy designed to be a core investment solution for all market environments. By investing in a balanced mix of 60 percent stocks and 40 percent bonds, the strategy seeks to optimise risk and reward. It aims to deliver the consistent, attractive income investors know and trust PIMCO for through bonds, as well as long-term capital growth through equities – at a moderate risk level.
Core investment strategies like P-BIG can be important for building a resilient investment portfolio. They can help provide stability and reliability to weather market volatility.
Shelby: Why the 60-40 split?
Erin: Our research shows that a 60/40 stock-bond allocation offers investors an attractive balance of risk and return over the long run. This approach provides stability for investors, avoiding the challenge of attempting to “time” stock and bond markets. A 60/40 portfolio also results in less risk than owning stocks alone, and greater return potential than owning bonds alone.
This balance creates diversification benefits, ultimately delivering greater portfolio stability in times of elevated uncertainty, and a smoother path of income generation and total return.
Shelby: What sets P-BIG apart from other balanced solutions?
Emmanuel: P-BIG takes a unique approach.
Firstly, other offerings tend to focus their stock picks on a specific style, sector or country, which can lead to less consistent returns over time and greater concentration risk. P-BIG uses a highly disciplined, unemotional equity investment process that invests globally across different styles, countries, and sectors. This systematic process seeks to avoid common biases that can act as a drag on performance, aiming instead to provide greater stability and more consistent returns over time.
Erin: Secondly, other offerings tend to focus their bond allocations on corporate high yield or other riskier sectors – which exhibit a high correlation to equity markets. P-BIG leverages PIMCO’s global resources to invest across the vast global bond market to generate more stable income and returns using a multi-sector approach.
And thirdly, while other strategies rely on a static asset allocation, limiting their adaptability to market changes, P-BIG has the ability to make modest, flexible adjustments to its exposures based on PIMCO’s macroeconomic views. We believe this can reduce risk and improve returns in a variety of different market environments.
Shelby: How does PIMCO's expertise in asset allocation and equities compare to its well-established reputation in fixed income?
Emmanuel: PIMCO has actually been managing asset allocation strategies for more than 20 years, and equities for more than 35 years. Our approach to asset allocation investing taps into PIMCO’s full depth and breadth of resourcing. We leverage the firm’s comprehensive global asset class and sector expertise as well as our extensive quantitative capabilities to source the best investment opportunities for our clients.
Importantly, through our quantitative equity research efforts, we have developed a systematic global equity approach that serves as a cornerstone in many of our quantitative and asset allocation strategies, including P-BIG.
Shelby: What role does P-BIG play in the current environment?
Erin: In the face of ongoing economic uncertainty, geopolitical tensions, and more volatile business cycles, we expect much more differentiated investment returns across asset classes and regions over the next few years.
Against this backdrop, we believe P-BIG is well positioned to serve as a source of stability by generating attractive income and total return through all stages of the economic cycle and in all market environments.