After years in which bonds played a relatively minor role in many portfolios, the picture has changed fundamentally. For Davide Gysi, Country Head Switzerland at US asset manager Pimco, the current environment also presents attractive opportunities for investors.

«When you look at where yields are today, these are good starting points for the years ahead,» he says.

Depending on the segment, yields of 6 to 7 percent in US dollars are currently achievable. This means fixed income can once again play an important role as a building block in a diversified portfolio, according to Gysi. Particularly after the experience of 2022, when equities and bonds came under pressure simultaneously, the environment has changed fundamentally.

Volatility Creates Opportunities

Gysi nevertheless stops short of describing the current situation as comfortable. Geopolitical uncertainty and high market volatility continue to present challenges for investors.

For active fixed-income managers, however, precisely this environment can create opportunities. Higher yields also translate into higher potential returns over the long term. It is therefore important not to view short-term fluctuations in isolation.

According to Gysi, client interest has increased accordingly. This was initially particularly evident among institutional investors and family offices, which generally have longer investment horizons. Gysi expects the topic to gain further traction among private investors over the next 12 months.

Pimco Expands Its Swiss Presence

Pimco also intends to capitalize on this momentum in Switzerland. Gysi took over responsibility for the Swiss business with a mandate to strengthen the asset manager's position in the local market.

Since then, the team has grown. Pimco now employs around 12 people in Zurich, two more than two years ago. Including employees in Munich and London who work primarily on the Swiss market, around 20 people in total are dedicated to the firm's Swiss business.

The asset manager has won new mandates from institutional clients as well as in private banking and among family offices. Pimco has also further diversified its offering for Swiss clients into private markets.

Ticino is another priority. Over the past two years, Pimco has significantly increased its activities in the region through events and roundtables, with team members from Zurich regularly traveling there.

Gysi remains convinced that Switzerland continues to be an attractive financial center for international asset managers. In particular, he says, its openness to new investment ideas and opportunities sets it apart from other financial centers.

Direct Lending Is Coming of Age

Pimco also sees growth potential in private markets. The direct lending market has expanded significantly over the past decade and, according to Gysi, is now entering a phase of consolidation.

«The segment has become considerably more mature and is now in a phase of consolidation,» Gysi says.

That does not mean Pimco is turning its back on direct lending. The asset class will continue to attract investor interest. At the same time, investors are increasingly looking for ways to diversify their private credit allocations more broadly.

Pimco is focusing in particular on asset-based finance. According to Gysi, the segment is increasingly attracting interest from existing direct lending investors because it can offer similar return targets while providing exposure to different risk profiles.

Don't Underestimate Illiquidity

Gysi cautions, however, against misconceptions about private markets. It is essential to discuss both the benefits and risks transparently with clients, particularly when it comes to illiquidity.

The same applies to so-called gates, which allow funds to limit redemptions. These mechanisms are specifically designed to protect existing investors and preserve the portfolio manager's ability to manage the portfolio effectively.

AI Creates New Credit Opportunities

When it comes to artificial intelligence, Gysi is less focused on the question of which stock will emerge as the big AI winner.

What matters more, in his view, is which financing opportunities will arise from the enormous capital requirements associated with data centers, infrastructure and other AI-related investments – and whether an investment provides sufficient assurance that the capital deployed will be repaid at maturity.

The growing size and complexity of such transactions could create additional opportunities for asset managers with the necessary structuring and credit analysis capabilities, Gysi says.

Active ETFs Will Gain Ground in Switzerland

Gysi sees another growth opportunity in active ETFs. Pimco has now listed such products in Switzerland and expects the investment vehicle to become increasingly important.

In fixed income in particular, the debate over active versus passive investing differs from that in equities. Active ETFs could therefore establish themselves alongside traditional funds as an additional investment vehicle.

The Swiss market is still at an early stage. «If we sit down again in one or two years, we will certainly have more to discuss about where the trend has gone,» Gysi says.

For Pimco, expanding its Swiss business remains a long-term undertaking. In addition to winning new clients, the focus will increasingly be on maintaining close relationships with existing ones. Asset managers are increasingly viewed as partners, Gysi says. Clients are no longer looking only for products, but for an ongoing dialogue about markets, portfolios and new investment opportunities.