More likely than not, the U.S. will reach a trade deal with China, but disputes and disagreements will continue for some time, according to one prominent asset management executive.

Speaking at the Morningstar Investment Conference in Chicago, PIMCO CEO Emmanuel “Manny” Roman sounded cautiously optimistic on the likelihood of an agreement on trade between the two nations, whose saber rattling on tariffs has touched off volatility in global asset prices.

“We think there’s an 80 percent chance that there’s a deal with China,” said Roman on Thursday. “It will take a while, and there will be a lot of gamesmanship, but the U.S. and China have a lot to win in an agreement.”

However, the old trade relationship between the two countries, “based on collaboration and outsourcing,” is ending as China rises to become more of a direct competitor to the U.S.

On Friday, the U.S. raised tariffs on $200 billion worth of Chinese products from 10 percent to 25 percent after the deadline for a trade agreement passed with no deal. Chinese officials have indicated that the country will reciprocate, but no specific response has yet been announced.

Regardless of the trade troubles, Roman sounded upbeat about the economy.

“Rates will remain fairly low, and that is a decent environment for asset returns,” said Roman. “In 2020 we’ll say different things because we’ll have an election, which will bring some volatility to the market, but all things will come to be reasonably positive—which is unusual for PIMCO, because when you are a bond manager, you are pessimistic on everything.”

Roman was also asked about PIMCO’s ability to compete in an asset management world that has become more passive, lower cost and driven by technology. He said that the firm’s ability to focus on active fixed-income strategies is part of the key to its success.

Though PIMCO has launched several equity strategies, Roman said that, outside of a handful of giant firms, asset managers will find the most success by focusing what they’re best at.

“You need to decide the business you want to be in,” said Roman. “You can be an index provider and try to be the cheapest, and that’s a business model. At the other extreme, you can try to be us, and we try to be an alpha machine. We do everything from the mortgage world to the fixed-income world to the private credit world. We’ll never be the biggest, but hopefully we’ll do well for our clients.”

Roman was also confident that PIMCO would not be threatened by the continuing rise of low-cost, passive investment products.

“The first thing I would say is that over one, three, five and 10 years, we’ve beat the benchmarks by 1 to 1.5 percent,” he said. “Also, passive in fixed income makes absolutely no sense. ... If you’re trying to replicate a fixed-income index, you’re going to churn your portfolio. Let’s remember that the more leveraged companies get a bigger slice of the index.”

Active managers in fixed income can also be more responsive to monetary policy changes and the trading behaviors of institutional investors and access derivatives to generate alpha, said Roman. Over a decade, including an active fixed-income product as part of an asset allocation in a defined contribution plan could add as much as 12 percent to 15 percent to the portfolio’s 10-year returns, he said.

Roman sees technology and the possibility of large technology incumbents like Amazon providing investment and financial advice offerings as potential challenges for asset managers like PIMCO. Over time, technology trends may cause a hollowing-out of the industry.

“There are going to be more mergers in the middle” he said. “The more you do different things in the middle—equities, fixed income, and what else – the more stress you have in terms of your ability to invest, and the more likely you are going to be forced to merge with someone else. The Invesco/Oppenheimer merger was an example of that effect.”