• Managers need access to cash to take opportunities, Pimco says
  • Fidelity doubled easy-to-sell securities in some portfolios

Pacific Investment Management Co. is preparing for further market volatility by keeping holdings in highly liquid securities, according to London-based money manager Mike Amey.

“We generally tend to hold a high level of liquidity in our portfolios,” Amey said in an interview on Bloomberg Television’s “Surveillance” with Jonathan Ferro and Tom Keene. “We recognize at times, and we’re going to get this over the next couple of years, there’s going to be bouts of volatility, markets are relatively illiquid and you want to have some cash to take advantage of those.”

Pimco is not alone in preparing for potential periods of low liquidity. Fidelity Investments has doubled holdings of easy-to-sell securities in some bond portfolios to ensure it can meet client redemptions if needed as U.S. interest rates rise, Robert Brown, the firm’s head of institutional fixed income, said this week.

The ability of funds and institutions to trade bonds has become an increasing area of concern in recent years amid central-bank asset purchases and new regulations. The amount of German bund futures that can go through the market at one time without moving the price, a gauge of market depth, fell 52 percent to around 700 contracts in October, from last year’s peak of 1,500 contracts in April, according to data compiled by JPMorgan Chase & Co. The average over the past three years is 900 contracts.

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