Post-Crisis Portfolio Solutions
Ed Devlin
Vice President, PIMCO
July 22, 2010

“The world is on a multi-year journey to an unstable destination, through unfamiliar territory, on an uneven road, having already used its spare tires.”

Close to 100 participants attended this presentation, which shed light on what might be expected in the world’s new economic reality, and the resulting implications for the Canadian market. Mr. Devlin highlighted continued emergence of key developing economies coupled with submergence of others, greater regulation, and extended periods of increased sovereign risk.  

Canada is anticipated to be a relative winner in the “New Normal”. The Canadian dollar will likely retain its strength due to demand for commodities from the emerging markets, and the real interest rates will remain low. More interest rate volatility is expected in the short term, with relative stability in the long term rates.

Generating alpha is seen as being more important than ever. Risk adjusted returns may be improved by incorporating foreign spread sectors into the mix – opportunities exist with a desynchronized recovery. Provincial debt may become an opportunity when foreign sovereign risks spike and the “baby is thrown out with the bath water”.  

Making the fixed income allocation work harder through active management can take pressure off the equity return requirements.

Here are a few comments about the presenation:

"Excellent overview of fixed income landscape."

"Timely topical material."

"Ed Devlin is approachable and has an effective speaking style."