Leonardo Lopes da Silva: Hello, I'm Leonardo Lopes da Silva, Account Manager at PIMCO. I'm here with Emmanuel Sharef, executive vice president and asset allocation portfolio manager. Emmanuel, let's talk about how PIMCO develops its asset allocation views. At a high level, what's the framework?
Emmanuel Sharef: Sure. Our framework is forward-looking and combines what we call "top-down" and "bottom-up" perspectives. On the top-down, we start with the macro picture - where is the global economy heading, and what does that mean for markets? On the bottom-up, we layer in extensive research at the asset class, sector, and security level. Bringing those together is really the core of what we do.
Leonardo Lopes da Silva: Let's unpack the top-down piece. What does that look like in practice?
Emmanuel Sharef: It starts with our forum process, which is pretty unique to PIMCO. Every year we hold a Secular Forum to develop a five-year outlook, and every quarter we hold a Cyclical Forum for the six- to twelve-month view. These forums bring together all of PIMCO's investment professionals, our Global Advisory Board - which includes former central bank governors and heads of state - and outside experts. The goal is to debate the big macro themes: growth, inflation, geopolitics, technology shifts, and so on. After each forum, our Investment Committee and portfolio managers translate those macro conclusions into actionable risk factor targets for portfolios.
Leonardo Lopes da Silva: And how does the bottom-up perspective feed in?
Emmanuel Sharef: We have specialist teams covering every corner of global markets -emerging markets, securitized credit, real assets, you name it. These teams are constantly evaluating fundamentals, valuations, and market technicals at a very granular level. They share their highest-conviction trade ideas, and we then assess which of those ideas fit within our multi-asset strategies. So, the top-down view tells us where we want to take risk, and the bottom-up input helps us figure out the best way to express that risk.
Leonardo Lopes da Silva: Clients often hear the terms "strategic" and "tactical" asset allocation. How do you distinguish between those?
Emmanuel Sharef: Think of them as operating on different time horizons. Strategic allocation is driven by our secular, five-year outlook - it anchors on where we are in the economic cycle and starting valuations to set longer-term portfolio tilts. Tactical allocation is shorter-term - it's about adjusting positioning based on near-term shifts in things like business activity, sentiment, or financial conditions. And beyond those two, we also look for structural opportunities - things like carry, momentum, and relative value ideas from our specialists. Because these engines operate over different horizons, combining them creates diversification of alpha across time, which aims to deliver consistent performance.
Leonardo Lopes da Silva: Once you have these views, how do you actually build the portfolio?
Emmanuel Sharef: We take the macro views, the bottom-up ideas, the portfolio's specific objectives and guidelines, and we optimize the mix. We implement through the most efficient instruments available and, critically, we partner closely with our risk management team throughout. They stress-test portfolios across a range of macro and market scenarios and we aim to position the portfolio to withstand a wide range of outcomes.
Leonardo Lopes da Silva: Any final takeaway on the process?
Emmanuel Sharef: I'd say it's the integration that sets it apart - a forward-looking macro framework, deep bottom-up specialist input, disciplined portfolio construction, and rigorous risk management, all working together to build globally diversified multi-asset portfolios.
Leonardo Lopes da Silva: Emmanuel, thanks for walking us through that.
Emmanuel Sharef: My pleasure.
Disclosure
PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.
All investments contain risk and may lose value.
Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
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