272. The economic tightrope: recession risks and interest rate dangers

Managed by Mike Riddell, the positioning of Allianz Strategic Bond fund is driven by the team’s view on the prevailing economic environment. In this interview, Mike outlines why he believes understanding the global economic direction and identifying mismatches between market pricing and actual risk, is so important for bond investors. 

He explains that while markets are currently pricing in minimal risk of recession, his fund remains flexible, employing tactics such as investing in government and corporate bonds, taking inflation views, and even investing in currencies. He also discusses potential risks, such as geopolitical events and China's economic challenges, which could have substantial implications for the global economy. Throughout the interview, Mike highlights the need for patience, the importance of understanding interest rate dynamics, and the fund's conviction in its stance, even if short-term losses occur.

What’s covered in this episode: 

• The objectives of the Allianz Strategic Bond fund
• The market mispricing a recession
• Why the manager is shorting corporate bonds
• Why the manager is bullish on government bonds
• What’s causing frustration for the manager today
• The manager’s view on last year’s underperformance
• The different scenarios that could cause a recessionary crisis
• The known, unknown of China — and what that means for investors
• Why news from China could potentially destabilise the global economy
• Ultimately, interest rates remain the main risk for a recession

More about the fund: 

Managed by Mike Riddell, the Allianz Strategic Bond fund adopts a distinctive approach influenced by the team's macroeconomic outlook. Mike believes most strategic bond funds masquerade as high yield bond funds and, as a result, have a high correlation with equities. This fund is very different and is all about looking at the bigger picture.

Learn more on fundcalibre.com

Please remember, we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at the time of listening. Elite Ratings are based on FundCalibre’s research methodology and are the opinion of FundCalibre’s research team only.

Learn more on fundcalibre.com

Please remember, we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at the time of listening. Elite Ratings are based on FundCalibre’s research methodology and are the opinion of FundCalibre’s research team only.