Why a 60/40 Portfolio Now? P-BIG’s Strategy for Uncertain Times

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Why a 60/40 Portfolio Now?
PIMCO Balanced Income and Growth (P-BIG): A Strategy for Uncertain Times

Hi, I’m Emmanuel Sharef, a multi-asset portfolio manager here at PIMCO and lead PM for the PIMCO Balanced Income and Growth, or “PBIG” strategy.

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Emmanuel Sharef, Portfolio Manager, Asset Allocation

Amid elevated macro and market uncertainty, investors are looking for a strategy that can help withstand shocks while delivering steady, reliable returns. PIMCO’s Balanced Income and Growth – an all-weather, global 60/40 stock-bond strategy that combines PIMCO’s fixed income expertise with quantitative stock selection – could be the solution you are looking for.

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What kind of investment strategy can help investors navigate today’s uncertainty with resilience?

In today’s uncertain world, we believe a disciplined, stable 60/40 strategy can help investors stay the course. Combining global equities and fixed income can provide balance and resilience through challenging times.

Allocating broadly across regions – not just the U.S. – provides diversification benefits that supports steady income and long-term total return. It’s a sensible approach given the increasing gaps between economies and markets.

When markets get volatile, emotions often take over. Investors tend to sell out of fear when markets fall and buy out of excitement when markets rise. Markets ultimately do normalise, and those who try to time their moves often end up worse off than those who stay invested.

For investors seeking to avoid the pitfalls of market timing, a portfolio comprising 60% global equities and 40% multi-sector bonds has proven to strike an attractive balance of risk and return over the long term – with no market timing needed.

In fact, since 1990, this 60/40 mix has delivered returns nearly as strong as solely investing in global stocks, but with around 37% less volatility.¹

PIMCO Balanced Income and Growth is a 60/40 strategy that offers a robust framework to counteract behavioural biases, navigate uncertainty, and achieve long-term success.

¹ As of 28 February 2025. Source PIMCO, Bloomberg. Data since 1/31/1990. For illustrative purposes only. Past performance is not a guarantee or a reliable indicator of future results. 60/40 Portfolio is represented by 60% MSCI ACWI / 40% Bloomberg US Aggregate. Global stocks represented by the MSCI ACWI Index.

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What advantages does P-BIG offer in today’s market environment?

P-BIG is an active, globally-diversified strategy designed to be a core investment solution for all market environments. It offers a stable, long-term allocation that can help investors avoid the risks of timing the market.

By investing in a balanced mix of 60% stocks and 40% 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, along with long-term capital growth through equities – at a moderate risk level.

But what truly sets P-BIG apart from other balanced solutions are three key features: systematic equity investing, flexible multi-sector fixed income, and macro-driven tactical adjustments. Let’s look at them one-by-one.

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P-BIG’s three key differentiators

P-BIG’s systematic equities approach uses a disciplined, unemotional stock investment process that provides global diversification. This helps limit the risk in any single country, sector, or stock exposed to higher tariffs or market volatility. Other offerings tend to focus their stock picks on a specific style, sector or country, which can lead to less consistent returns and greater concentration risk.

On the fixed income side, P-BIG’s flexible multi-sector approach taps into PIMCO’s global resources to invest across the vast global bond market, focusing on high quality, diversified income sources. This helps manage risk and pursue stable income and returns, even in challenging economic environments. In contrast, some strategies lean heavily on riskier bond sectors, such as corporate high yield, which often move closely with equity markets.

Finally, P-BIG uses macro-driven tactical adjustments to make modest tweaks to its equity, duration, credit, and currency exposures based on PIMCO’s economic outlook. This flexibility helps the portfolio respond to market disruptions, like rising inflation or slower GDP growth.

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What is PIMCO’s edge in the systematic equity space?

PIMCO’s edge in systematic equity investing comes from using extensive data and a disciplined, unemotional approach to building portfolios. Advanced quantitative techniques help us identify the most robust opportunities in the global stock market.

We analyse thousands of data points across nearly 3,000 companies worldwide and have designed numerous innovative signals that others might overlook. These are combined with traditional metrics like price-to-cash flow to drive stock selection. In fact, more than half of the signals we use are developed in-house by PIMCO’s quantitative equity research team.

We group these signals into four key themes – quality, value, momentum, and growth – each tied to long-term return potential. From there, we create a single score that reflects a company’s overall attractiveness, helping us select the most well-rounded companies with strong future return prospects for the portfolio.

In uncertain times, P-BIG’s global exposure to multiple equity factors can harness repeatable alpha sources and structural market inefficiencies, offering a smoother, more consistent return profile.

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Investors worldwide know and trust PIMCO for its Income Strategy. How does this cornerstone strategy add value to P-BIG?

P-BIG’s bond allocation uses a similar approach as PIMCO’s flagship Income Strategy, in that it does not rely on any one bond sector or industry to generate returns. Instead, it leverages PIMCO’s global resources to invest across the +$151 trillion global bond market.

The strategy flexibly invests in a mix of higher-yielding assets, such as securitised bonds, which tend to perform well during periods of robust economic growth, along with higher-quality assets like U.S. government bonds, which typically provide stability when growth slows.

PIMCO’s multi-sector approach adds value to PBIG by diversifying exposure across different economic conditions, helping to balance performance.

Its focus on yield reduces the need for market timing, as consistent income can offset short-term volatility.

Broad flexibility enables tactical adjustments to capture opportunities, while prioritising senior, secured bonds to manage downside risk.

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Why P-BIG now?

Looking ahead, we expect ongoing economic uncertainty, geopolitical risk, and more volatile business cycles. We believe global growth will disappoint over the next five years, with investment returns varying more across asset classes and regions.

Against this backdrop, P-BIG’s active, high-quality and global approach positions it well for a broad set of macroeconomic and market outcomes.

Disclosures

Important information

Past performance is not a guarantee or a reliable indicator of future results.

Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. References to Agency and non-agency mortgage-backed securities refer to mortgages issued in the United States. U.S. agency mortgage-backed securities issued by Ginnie Mae (GNMA) are backed by the full faith and credit of the United States government. Securities issued by Freddie Mac (FHLMC) and Fannie Mae (FNMA) provide an agency guarantee of timely repayment of principal and interest but are not backed by the full faith and credit of the U.S. government. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Collateralized Loan Obligations (CLOs) may involve a high degree of risk and are intended for sale to qualified investors only. Investors may lose some or all of the investment and there may be periods where no cash flow distributions are received. CLOs are exposed to risks such as credit, default, liquidity, management, volatility, interest rate and credit risk. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower’s obligation, or that such collateral could be liquidated. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. The credit quality of a particular security or group of securities does not ensure the stability or safety of the overall portfolio. Diversification does not ensure against loss.

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. Investors should consult their investment professional prior to making an investment decision. Outlook and strategies are subject to change without notice.

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