CHENGDU, Dec. 6 (NBD) -- Sachin Gupta, the executive vice president of PIMCO which is a global investment management firm with a singular focus on preserving and enhancing investors’ assets, on Sunday called for cautious approaches to investing in the bond market of 2017.

In an exclusive interview with NBD at Cainxin-YunFeng Investment Forum held last week in Beijing, Sachin, also PIMCO global portfolio manager in the Newport Beach office and head of the global desk, elaborated “if bond yields overshoot, like 2013 episode, investors should look to increase their allocation to fixed income”. Within bond markets, Sachin thought that investment grade US corporates and mortgage bonds linked to US housing will continue to provide sources of safe income to global investors.

When asked of the reasons behind the sell-off in bond markets on November, he noted that the economy is underpinned by the combined forces of changing demographics, falling productivity and high level of debt globally.

To him, the current sell-off in bond markets is mostly a reaction to results of US elections. Due to a strong political mandate and Republican control of both houses, prospects for Trump’s pro-growth agenda have gone up.

However, Sachin also added that the sell-off in bond yields would remain capped because we’re still in a world with significant debt, lots of excess capacity and very little actual inflation pressure across the globe.

Lastly, he reminded that emerging markets like Mexico, Russia, Brazil and South Africa offer value however investors need to be careful in position sizing due to increased uncertainty regarding Trump administration's trade policies and impact of future Fed rate hikes on currencies.