Pacific Investment Management Co., home to the world's biggestfixed-income fund, is shying away from risky assets as it sees agrowing disconnect between the performances of financial marketsand the global economy.

“Especially with ever-elevated prices, and absent a favorablegrowth shift, we will continue to bring down risk postures ofportfolios,” said Mohamed El-Erian, chief executive officer ofNewport Beach, California-based Pimco, outlining the company'sinvestment strategy over the next three to five years.

In a report posted today on Pimco's website, El-Erian said theworld economy is undergoing a “stable disequilibrium” that couldend in financial turmoil, greater social tensions, andbeggar-thy-neighbor national policies. Egged on by “hyperactive”central banks, investors are playing down the dangers and pushingfinancial markets higher, he said.