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Outstanding Portfolio Manager: Dan Fuss

Outstanding Portfolio Manager: Dan Fuss
Securities In This Article
Loomis Sayles Bond Instl

Miriam Sjoblom: Hi. I'm Miriam Sjoblom. I'm a director in the manager research group at Morningstar, and I'm here at the Morningstar Investment Conference today with Dan Fuss, who is a legendary bond manager, best known for managing the Loomis Sayles Bond Fund.

Dan, thank you for joining us today.

Dan Fuss: Thank you, Miriam.

Sjoblom: And it's my great pleasure to congratulate you on winning our very first award for Outstanding Portfolio Manager here at the conference.

Fuss: Thank you.

Sjoblom: Dan, reflecting back over your career, I thought you must have plenty of examples of interesting investment opportunities, but what's one that really stands out in your mind?

Fuss: The one that really stands out is the one I was most reluctant to do, Miriam. It was I think approximately the last Thursday of September of 1981 when the U.S. Treasury was not being successful in trying to bring a new bond. It was the 15 3/4 of September 1996 maturity. Noncallable life. Nobody wanted to buy it. There was a lot of pressure to do it, and so finally I looked at this, and I said, "You know, this might possibly be a reasonable opportunity." So we bought. That was the highest yield the U.S. Treasury ever paid on a bond, and it was noncallable life, and it was one of the most reluctant things I ever did. So, the lesson in that was: When the market pressures are overwhelmingly offering you something, maybe it's a good idea to look at it.

Sjoblom: And in our discussions in the past, that's something we've discussed many, many times in different scenarios. So thank you for sharing that.

Fuss: You're welcome.

Sjoblom: Dan, you know, there's few managers who have as much experience as you do. When you look ahead to what it's going to take for a portfolio manager to be successful in bond investing in the decade or even decades to come, what do you think it's going to be?

Fuss: Well, I think perspective will be the thing. Perspective as of the moment, plus historical perspective. Markets will be markets. They'll change, they'll evolve, they'll be very different 30, 40, 50 years from now. But to be able to adapt to the times and able to see all the things impacting a market. That's part one. Part two is to have--as we do at Loomis--have the access to the people who are looking at the very specific items. So you want to combine the overall vision of the market opportunities.

It might not be bonds at all. Bonds could become obsolete. They could. Hopefully, I won't. But they could. And so you have to be aware of the whole thing. You don't want to get trapped by a market. You don't want to get trapped by a narrow part even if your narrow specialty is the case. So you need both the broad and the specific. And you need the--quite frankly, I think--the wisdom to determine who's good at what. So you tend to need a group of people. And then run it well. And it's a group sort of thing, Miriam. I'm on my soap box right now. But there's no one person who's the genius. It's a group. The genius comes from the group.

Sjoblom: So having good help, and no one can do it alone?

Fuss: Right, exactly. You've got it.

Sjoblom: Well, thank you Dan, that's very good advice and congratulations again. Thank you for being here with us.

Fuss: Thank you. My pleasure.

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About the Author

Miriam Sjoblom

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Miriam Sjoblom is a director on the global manager research team at Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She oversees the global ratings process for fixed-income strategies.

Sjoblom returned to Morningstar in 2016 after spending three years as a senior consultant for Aon Hewitt Investment Consulting, where she researched alternative credit strategies and advised institutional clients on hedge fund and private debt manager selection. Previously, she was a member of Morningstar’s manager research group from 2007 to 2013, during which time she covered multisector and specialist fixed-income managers and oversaw the North American fixed-income manager research team. Before joining Morningstar, Sjoblom worked as a business analyst in Citigroup's investment banking division and as a fixed-income analyst for Performance Trust Capital Partners.

Sjoblom received a bachelor’s degree in English literature from the University of Chicago and a master’s degree in media studies from The New School. She also holds the Chartered Financial Analyst® and Chartered Alternative Investment Analyst designations.

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