Bond specialist PIMCO has handed two of its most senior fund managers new funds designed to help investors combat interest rate risk, Citywire Global can exclusively reveal.
PIMCO said it had opted to launch the two strategies in order to offer a format with lower structural interest rate risk for investors who may be concerned about rising rate risks.
Citywire + rated manager Kiesel (pictured) will run the PIMCO GIS Low Duration Global Investment Grade Credit fund, which will invest mainly in short-dated corporate bonds.
Commenting on his new fund, Kiesel said: ‘Investors are looking for solutions to lower their overall exposure to interest rates in a potentially rising rate environment.
‘This new strategy can provide investors with the opportunity to participate in the short dated segment of the global credit market, providing more flexibility and less sensitivity to interest rate risk than a traditional global credit strategy.’
Meanwhile, inflation expert Worah, who runs three funds and was also handed a role on the group’s multi-asset fund last month, will manage the PIMCO GIS Low Duration Real Return fund.
It will invest largely in the inflation-linked bond markets but will maintain structurally lower interest rate sensitivity than traditional inflation-linked bond funds, PIMCO said.
Worah added: ‘The array of policies implemented by developed country governments and central banks to address the global financial crisis has resulted in unsustainably high debt levels and zero-bound nominal interest rates.
‘While these policies have successfully suppressed the risk of deflation and depression posed by the crisis, they have also increased the risk of higher inflation in the years ahead. This new strategy helps investors to better address the risk of higher inflation and rising rates.’