Pimco’s first equity strategy has retained a top holding in gold as a hedge against economic uncertainty, despite fears of a bubble in the asset class.
Anne Gudefin, the co-manager of the recently launched Pimco EqS Pathfinder fund, held 4.2% in the SPDR Gold trust at the end of August.
“We are long gold because we don’t believe there is much normality,” she says.
Gold is an unusual top holding for an equity fund, especially for a deep-value global manager like Gudefin.
In the main, she says she is deploying the same bottom-up global equity selection process as she used at her previous employers Franklin Templeton.
Currently she sees bargains in areas like Europe, where she argues the eurozone crisis has disproportionately affected the share price of some multinationals. (article continues below)
In her top 10, she holds defensives such as British tobacco stocks BAT and Imperial Tobacco and European names in beverages and healthy staple foods, such as Danone, Carlsberg and Pernod-Ricard.
But she can also take a double-digit position in special opportunities where Pimco has the relevant expertise, such as merger arbitrage and distressed credit.
She can also guard against top-down factors through holdings like gold, or by hedging currencies using Pimco’s currency expertise.
Overall, Gudefin says she emphasises capital preservation. She says gold is consistent with that remit given current levels of uncertainty.
Bill Gross, the managing director of Pimco, has also warned on the general outlook for markets.
In particular, he recently branded the American treasury market the most brazen Ponzi scheme of all time.