Pimco replaces German and French debt with Italy’s bonds

Fund manager Pimco is reducing its allocation to German and French government debt, increasing the weight of Italian bonds in its portfolio.

As reported by the foreign press, Andrew Bosomworth, head of Pimco portfolio management in Germany, said German bunds don’t generate enough return, with 10-year debt yields below 1.5%, and French government bonds are too expensive.

On the contrary, following the support announced by the European Central bank, Italian but also Spanish government debt represents a better bet.

Government debt retains its attractiveness only when priced correctly, he added.

Pimco’s change in strategy is in line with the view of Merrill Lynch Wealth Management.

Speaking at a press event today, Bill O’Neill, chief investment officer for Europe, Middle East and Africa said Italy’s government bonds are the most attractive within peripheral Europe.

Their price reflects uncertainty over the outcome of political elections coming up in the country, but taking into account the likely commitment of any future government to implement measures agreed at European level, Italy’s bonds can be considered as an interesting investment class.

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