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Dan Ivascyn, who runs the world’s largest actively managed bond fund at Pacific Investment Management Co., says now is a good time to reduce risk.

Geopolitical tensions and rising interest rates have created a “much more fragile situation” than in early 2016, when the Brexit vote and the U.S. elections weighed on markets, Ivascyn said at a panel discussion Thursday. With fixed-income markets still expensive by historical standards, there’s less room to absorb negative surprises, he said.

“We are not overly alarmist but we do think it’s time to take a bit of risk off the table,” Ivascyn, Pimco’s group chief investment officer, told the UBS Global Wealth Management Investment Summit in Davos, Switzerland. “Market participants should become a bit more concerned. Wherever you were in the risk spectrum a year or two ago, we think you should be a touch lower.”

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An escalating trade war between the U.S. and China, Russian sanctions and the conflict in Syria have rattled global markets this year. Rising interest rates meanwhile are starting to put pressure on corporations that have borrowed heavily in the past years when rates were near zero. Bond managers have warned that over-leveraged corporations could create the next wave of financial pain.

“You are clearly seeing signs of increased volatility associated with some of the central bank uncertainty, political uncertainty we have seen in the U.S., emerging markets and Europe,” Ivascyn said.

Ivascyn co-manages the $111.9 billion Pimco Income Fund, the largest actively managed fixed-income fund. The U.S. version and its internationally sold counterpart, the $73.3 billion GIS Income Fund, were among the world’s fastest growing mutual funds in 2017, but inflows slowed this year as returns were hurt by rising interest rates. Pimco Income declined 0.44 percent this year, though it’s still beating 67 percent of its peers.

The money manager said his “base case” is for two more interest rate increases by the Federal Reserve this year, though it “could be four.” The yield on 10-year Treasuries should approach 3 percent over the next 12 months, and could “even get a little higher” toward the end of the cycle. He reiterated that yields that high wouldn’t necessarily herald a bear market in bonds but could be a buying opportunity instead.

“It’s far too premature to begin declaring a bear market for bonds,” he said in comments to reporters after the discussion.

Ivascyn, 48, was promoted to Pimco’s chief money manager in 2014 following the ouster of the firm’s co-founder Bill Gross. Unlike his colorful predecessor, Ivascyn shies away from the spotlight, making rare appearances at conferences or in broadcast media.

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