Monday, March 3, 2014

World's Biggest Bond Fund Cutting Canadian Holdings Due To Anticipated Real Estate Downturn Of Up To 30%

Pimco, the world’s biggest bond fund,is slashing its holdings in Canada due to an anticipated decline of 10% to 30%.

Some excerpts from the Globe and Mail article.
Pimco’s primary Total Return Fund, with assets of almost $250-billion (U.S.), cut its holdings of Canadian debt to 2% in the third quarter of last year, compared to 4% 12 months earlier.

About a month ago, on Pimco’s website, Mr. Devlin wrote that there is little chance of an all-out meltdown in Canadian real estate and that he expects a more orderly cooling.

A full crash, he wrote, would only be sparked by developments he doesn’t see in the cards, such a sharp hike in interest rates, a sharp rise in unemployment or a disruption to mortgage credit.
But you have to wonder… what other dominos would fall if real estate declined 20%? 


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