What is PIMCO’s Emerging Market Investment Approach?
Consistent with PIMCO’s overall investment philosophy, our approach to emerging market investing begins with a secular analysis of the global economy which is fine-tuned on a cyclical basis. Within this framework we use a multi-step process to guide our emerging markets investment decisions. First, we identify countries with strong, underlying credit fundamentals (including strong fiscal positions, stable/improving political situations, comfortable reserve levels, and debt profiles that can withstand financial shocks, among others). We then consider the impact of our global outlook on these countries, including prospects for demand from advanced economies, commodity prices, interest rate trends and other components of the external environment. Finally, we evaluate the technical conditions of the credit to identify both the upside and the imbalances that could potentially lead to market dislocations.
This disciplined multi-pronged framework provides the basis for our country weighting, duration, curve, currency and instrument selection decisions, as well as relative value assessments. Our high quality emphasis allows us to optimize the set of strategies for a given investment environment while helping to limit downside risk.