Countries need new growth model: PIMCO
In the low-growth 'new normal' of the global economy, countries need to find a way to grow that is not accompanied by the accumulation of debt, according to PIMCO head of global portfolio management Scott Mather.
"We've moved into a phase where we really anticipate for most of the developed world that growth is going to be teetering around zero," Mather said.
He added that a low-growth and low-inflation environment could create lots of opportunities for bond investors, but those opportunities meant that bonds were no longer risk-free, he added.
Countries are not going to be "pulling together" when it comes to monetary and fiscal policy any longer, he added. While there used to be the appearance of economic coordination, countries will now be uncomfortable doing the same things, Mather said.
"Several years from now, we're not going to end up in the same place where growth and inflation look the same everywhere," Mather said.
PIMCO recently surveyed 16 of its institutional clients who represent $300 billion in superannuation assets. In March, respondents were split fifty-fifty on whether US growth would be closer to zero or 3 per cent; today, 80 per cent of respondents said US economic growth would be closer to zero.
The biggest three concerns for PIMCO clients were the uncertainty in the Eurozone; the potential effects of the collapse of the Euro; and the prospect of deflation around the world. The three biggest opportunities were the rise of skilled alpha strategies; fixed income carry strategies hedged into Australian dollars; and infrastructure and infrastructure debt.
Recommended for you
ASIC has banned a former financial adviser for his role in encouraging clients to invest their retirement money in the Global Capital Property Fund, run by United Global Capital.
With reporting season concluded for another financial year, Money Management rounds up the result of Australia’s listed advice licensees and where they are looking to in the year ahead.
Having acquired Evidentia with the goal of building out its managed accounts division, GDG has reported a 49 per cent rise in managed account funds under management in FY25.
The inquiry into the collapse of Dixon Advisory and broader wealth management companies by the Senate economics references committee will not be re-adopted.