Pimco Quants Say Beware of Bond Hedges for High-Flying Stocks
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Using multi-pronged strategy boosts volatility-adjusted return
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‘Lot of hedges have disappointed,’ says Pimco’s Jamil Baz
The old recipe of using bonds to hedge against risks from equity holdings may not be a winner anymore, and investors would be better off with a more complex approach that relies on multiple tactics, according to Pacific Investment Management Co. analysis.
With stock prices hitting historic highs across the globe, and the U.S. enjoying its second-longest bull run in history, there’s plenty of reason to seek protection. All the more so when measures of volatility in equity, currency and bond markets sit near the lowest levels ever — a potential gauge that complacency has set in. But after a three-decade bull run of their own, debt securities may not be the best option for shoring up returns…
Pimco Quants Say Beware of Bond Hedges for High-Flying Stocks
