Outstanding Portfolio Manager: Dan Fuss

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.