Geraldine Sundstrom, manager of the PIMCO GIS Dynamic Multi-Asset Fund on the shock of managing risk and returns in a pandemic, and how she successfully navigated the tumultuous waters of 2020 and 2021
Fund manager Geraldine Sundstrom notes she follows a time-tested motto when it comes to managing investor portfolios: one that focuses on "winning by not losing".
It is a strategy that has paid off for the PIMCO GIS Dynamic Multi-Asset Fund in the unprecedented environment investors faced during 2020 and the start of 2021.
In the 15 months to 31 March 2021, the fund delivered an annualized return of 13.1% in GBP after fees. Sundstrom strongly believes that the strong performance is down to the agile, dynamic asset allocation that allows the Fund to be completely unconstrained from any benchmark or static allocation, while also protecting returns on the downside.
"Being dynamic is very important these days, more so since yield levels are extremely low," she says. "Static asset allocation is unlikely to respond well in times of stress. We also find ourselves in times of disruption - climate, technological, political - and managers need to have the tools to be able to adjust to this. A passive allocation is not enough."
The quality ladder
Before the pandemic, PIMCO managers were already aware they were late in the economic cycle, and it was time to move up the quality ladder.
As a result, they had modest levels of total risk in the portfolio, with equity exposure focused on higher quality names and, on the fixed income side, investment grade credit along with safe duration high quality government bonds. But as the pandemic hit, quick thinking was key.
"It was a shock for all of us," says Sundstrom.