PIMCO is trimming its exposure to the debt of financial services companies along with high-yield bonds, apparently believing a correction is in the wings.

In fact, in its latest quarterly report, PIMCO says it thinks the recovery could be “W”-shaped, with the effects of the stimulus plan and consumer spending fading in 2010.

“Our holdings of financials will likely be trimmed after their recent rally,” PIMCO said. “We will likely continue to avoid the high-yield sector [as it is] vulnerable to an expected rise in defaults and, in some cases, to risks of government-imposed burden sharing.”

Instead, the company favors high-quality companies and diversification outside the U.S.

With high-yield up 31% so far this year, the rally “may be overdone in some segments,” Greg Hopper, senior portfolio manager at Artio Global Investors, told The Financial Times. “It is more dangerous now, and there is still at least as much of a chance of bankruptcy.”

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