PIMCO – Secular Outlook – “The New Neutral” – Bill Gross

PIMCO – Secular Outlook – “The New Neutral” – Bill Gross


Every year PIMCO conducts a day’s long conference with thought leaders across their company and across the globe. This Secular Forum plays an integral role in guiding PIMCO’s global investment strategy for the upcoming three to five years. PIMCO’s 32nd annual Secular Forum was moderated by Richard Clarida in Newport Beach, May 5-7, 2014.

The output from the forum is published as PIMCO’s Secular Outlook – “The New Neutral” by Bill Gross and Richard Clarida Ph.D. This is a follow-up to the term PIMCO coined 5 years ago “The New Normal”, which pointed to slower than average trend growth for economies across the globe. Their overall thesis has played out very closely to what had been anticipated. The New Neutral suggest slower economic growth will force interest rates to remain lower for longer than had been seen in past recoveries. Therefore PIMCO suggests there will be less stock and bond market volatility, but also lower than average returns for all assets. Investment implications for CFM’s portfolios would suggest an overweight to stocks vs. bonds, reduced interest rate risk (as measured by bond duration), and an emphasis on tactical asset allocation to improve returns above PIMCO’s below-average secular outlook projections.

PIMCO’s Secular Outlook analysis identified a few key themes for long-term investors, along with their portfolio implications.

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