Pimco recommends holding a moderate amount of duration risk, given there is fair amount of consensus about the trajectory for yields. Current duration on its Income Fund is 2.4 years.
Emerging markets comprise 35 percent of Pimco Income Fund , with another 27 percent allocated to the mortgage sector.
Pimco product manager Paul Reisz said the fund was also holding short-duration Japanese government bills which, though low-yielding, offered a good return when swapped into dollars.
"When you hedge them back to the U.S. dollar, you can pick up an additional 20 to 40 basis points," said Reisz.
The best opportunities for interest income, such as mortgage backed securities or lower-rated bonds issued by banks, were outside Asia. Yet the bond fund is positive on Asian corporate debt because yields in that asset class have been less compressed during the past few years of quantitative easing.
Pimco is however selective in India and Indonesia because bonds there have mostly priced in the optimism over growth and reforms promised by new governments.
It is underweight Thailand and Malaysia's local debt, believing neither market adequately compensates investors for the risks they face from low oil prices and sagging growth momentum.