Classics never go out of style! Billions of dollars are flowing into Pimco's "60/40" fund, placing real bets on the "offensive and defensive" strategy amid the AI frenzy.

One of the largest fixed-income investment giants in the world, Pacific Investment Management Co. (Pimco), which operates The Pacific Asset Management, has a large mutual fund that adopts a traditional allocation strategy of 60% stocks and 40% bonds. In the first half of this year, it has attracted over $10 billion in inflows. Pimco noted that this trend indicates that investors in Asia still have a strong demand for this classic asset allocation strategyespecially for investments in leaders of the Asian AI computing power industry, despite the strategy sometimes facing scrutiny due to extreme volatility in global stock and bond markets. Marcio Bogoricin, head of global wealth management for Pimco in regions outside of Japan, stated that after assessing the risks related to geopolitical conflicts in the Middle East, affluent clients from Taiwan, Hong Kong, Singapore, and mainland China became the primary high-net-worth investor group for this large 60/40 fund this year. As of June 30, the total assets of this balanced income and growth fund under The Pacific Investment Management Co. (Pimco Balanced Income and Growth Fund) have more than doubled since the end of 2025, reaching $16.3 billion, with an annualized return exceeding 10% after deducting the first half's fees. This fully highlights the simultaneous presence of three key labels on this 60/40 flagship fund: the revival of classic allocation strategies, exposure to growth in AI computing infrastructure, and the defensive value of bonds. The classic "60/40 portfolio," which allocates 60% to stocks and 40% to bonds, has long been a mainstay in financial markets. From AI chips to Japan's semiconductor equipment giants, AI assets bolster Pimco's 60/40 strategy. The protracted U.S.-Iran conflict has led to significant fluctuations in oil prices since the beginning of this year, raising concerns about inflation and increasing the likelihood of further hikes in global central bank benchmark interest rates. This has somewhat diminished the attractiveness of global bond assets, shaking the notion that bonds can provide positive protection to investors in a 60/40 portfolio when stocks decline. However, Pimco's large fund continues to grow in size and has achieved double-digit returns. "We had a strong start this year," Bogoricin said in an interview. "In March, following a renewed geopolitical conflict in the Middle East, investors paused their investment actions, but the inflows into the fund remained robust." As of June 30, the assets of Pimco's balanced income and growth fund reached $16.3 billion, up over 100% from the end of 2025. The fund's investment return in the first half of this year, after deducting fees, still exceeded 10%, compared to an impressive 21.65% the previous year. Bogoricin noted that the fund's 60% stock allocation last year captured trading opportunities in the AI computing theme by investing in semiconductor companies such as Samsung Electronics, SK Hynix, and TSMC, which play a central role in the global AI computing power industry, as these companies' valuations soared. However, earlier this year, the fund started to take profits and actively reduce these exposures, which is why the collective plunge of Asian computing power stocks in late June had less impact on the fund. Recently, Bogoricin mentioned that this large 60/40 strategy fund has been seeking investment opportunities in high-end semiconductor equipment suppliers outside of the U.S. stock market, such as Tokyo Electron, Lasertec, and Advantest from the Japanese stock market. Unlike the U.S. and Korean markets, which are currently dominated by AI powerhouses like Nvidia, AMD, Micron, SK Hynix, and Samsung, the unique aspect of the Japanese market is that it does not possess such super dominators but has a robust lineup of indispensable AI assets deeply embedded in the AI computing power industry chain, including Tokyo Electron, Advantest, DISCO, Lasertec, Socionext, and SoftBank. As a result, foreign capital generally views Japan as the "second battlefield" for AI computing power infrastructure. Compared to the two major semiconductor equipment giants headquartered in the U.S., Applied Materials and Lam Research, Tokyo Electron has the highest global market share in the fields of coating machines and developers (Coater/Developer). In areas such as ALD, CVD, PVD, RTP, CMP, etching, and ion implantation equipment, Tokyo Electron is regarded as Applied Materials' strongest competitor. At TSMC and Intel chip factories, the presence of Tokyo Electron and Applied Materials is nearly ubiquitous. Unlike ASML, which has always focused on lithography, Lam Research tends to concentrate more on etching, cleaning, patterning, and critical film processes, focusing on high aspect ratio (HAR) etching/deposition and related process capabilities required for advanced HBM storage. The high-end equipment provided by Tokyo Electron and Applied Materials plays a critical role in nearly every step of the chip manufacturing process, covering essential stages such as atomic layer deposition (ALD), chemical vapor deposition (CVD), physical vapor deposition (PVD), and rapid thermal processing (RTP). One of the internationally renowned credit rating agencies, Morningstar, tracks 250 funds with similar asset allocation structures. According to their latest compiled data, since early 2025, Pimco's large 60/40 strategy fund (Pimco Balanced Income and Growth Fund) has received net inflows exceeding $14 billion, nearly three times the size of the second-ranked Allianz Income and Growth Fund. Morningstar senior analyst Sam Hui stated that the fund benefits from a relatively large "neutral stock allocation stance." "Its performance has also exceeded its long-term 60/40 investment performance benchmark, demonstrating its strong capabilities in stock and bond selection and timing in the Asian market." 60/40 is not about exiting AI, but about equipping AI with the super safety net of bonds. The strong inflow trend of Pimco's latest 60/40 strategy fund highlights that the Asian AI bull market has not ended, but more mature funds are using bonds to reduce portfolio volatility and are shifting stock asset allocation exposure from crowded leaders to semiconductor equipment leaders, advanced packaging, and power infrastructure segments that are not yet fully priced. The Pimco 60/40 fund attracted over $10 billion in inflows, particularly from wealthy Asian investors; the core signal is not that investors suddenly believe stocks and bonds will always be negatively correlated, but that Asian high-net-worth capital is shifting from unilateral bets on risk assets to a "retain growth exposure while purchasing income and recession protection" structural combination. Current high bond yields can provide substantial holding returns; if the economy significantly slows down, major central banks have more room to cut rates compared to the decade before the pandemic, meaning high-quality bonds could still play a role in capital gains and risk buffering. However, during times of rising oil prices and inflation due to Middle Eastern conflicts, stocks and bonds may still fall in tandem, hence this revival trend of Pimco's 60/40 assets relies more on active duration management, credit selection, and stock picking rather than mechanical allocation. Pimco itself also emphasizes that bonds still have diversification value in economic downturns. For the Asian AI computing power chain, this influx of funds is overall favorable, but it reveals a clear internal rotation: the fund captured the first-stage AI chip re-evaluation last year through investments in Samsung Electronics, SK Hynix, and TSMC, and this year has begun reducing significantly appreciated core holdings and shifted towards equipment suppliers outside of the U.S., such as Japan. This does not negate AI demand, but rather it spreads from high beta winners in AI ASIC/GPU, HBM/DRAM/NAND, and wafer foundry to capital expenditures "toll booths" in the semiconductor industry chain, including etching, deposition, inspection, cutting, advanced packaging, and materials. One of the largest customers for semiconductor equipment manufacturersTSMC, dubbed the "king of chip foundries," saw its revenue grow 36% year-on-year in the second quarter and is significantly raising its full-year capital budget to $60 billion$64 billion due to AI and intelligent agent demands. The mid-term outlook for the Asian AI computing power chain remains strong, but the investment theme is shifting from "any AI computing power keywords can rise sharply" to visibility of orders, technological barriers, capital efficiency, and valuation discipline. SEMI expects global semiconductor equipment sales to grow by 23.2% to $165.9 billion in 2026 and reach $229.5 billion by 2028, providing a longer prosperous window for Japanese equipment and material suppliers. For the global stock and bond markets, this indicates that funds have not fully turned to safe havens but are establishing a classic stock-bond position of "moderate risk appetite + higher safety margins": stocks continue to bear earning growth, while bonds undertake yield and tail protection. The fund achieved double-digit returns after fees while outperforming its own 60/40 average benchmark, suggesting that the future stock and bond market is more likely to be led by active management rather than simple index beta. Global stock markets can still rise alongside earnings growth, but long-term interest rates, oil prices, and inflation will limit the unlimited expansion of valuations; the bond market, however, offers fundamentally attractive yield pricing and the current high coupon advantages, but it is necessary to avoid excessively long durations, fiscal supply-sensitive, and low-quality credit assets.