PIMCO, the world's second-largest bond fund manager, is venturing into stocks, taking on competitors BlackRock
'New normal' meets deep value
PIMCO is known for its 'new normal' thesis, which says economies will grow at lower rates and will decline relative to emerging economies with superior growth dynamics and healthier public finances. Accordingly, PIMCO's EqS Pathfinder fund can invest globally. However, the managers, Charles Lahr and Anne Gudefin, are bottom-up value investors who managed funds at the respected Mutual Series of Franklin Templeton Investments. Lahr is based in New York; Gudefin works out of London.
Focus on European stocks
At present, the duo believe Europe is the greatest area of opportunity. As of June 30, a third of their portfolio was invested in the U.K., France, Switzerland, and Germany. As Lahr explained last month: "Plenty of other companies are not exposed to sovereign risk thanks to their substantial foreign operations and other factors, yet they have been down substantially with the overall market in Europe, trading at meaningful earnings multiple discounts to their U.S. counterparts."
A European company poised for growth
Accordingly, one of their largest holdings is consumer staple British-American Tobacco
One surprise holding
Finally, there is one surprise holding for investors that are typically focused on cash flows -- the SPDR Gold Shares ETF
With the recovery stalling and the economy on the brink of deflation, a sustainable dividend will become increasingly valuable. Jordan DiPietro has identified the best dividend stock. Period.