Senior Portfolio Manager
BNY Mellon Global Fixed Income Fund
and BNY Mellon International Bond Fund
23 years of experience
Joined Mellon in 2005
The BNY Mellon Global Fixed Income manager walks us through what he loves so much about the asset class as well as his life story, from UPS to fixed income extraordinaire.
How did you end up pursuing investing as a career?
I was an economics major in college and I always had a personal interest in investing. It wasn’t something I went into saying, “I want to be a portfolio manager one day and I’m going to manage a bond fund”. Many pieces fell into place in a certain way that led me to this. I started my career in a fund accounting role, which was more of a back-office operations capacity at a prior firm. Afterwards, a series of promotions led me to gradually gain more responsibility in regards to hands-on investing.
What do you like about working in asset management?
I enjoy how every day is different with a fresh set of challenges. Almost every headline story can affect my portfolio in some way. It’s exciting to work every day and not know what the market will do, prompting us to figure out how to navigate that environment. This enables me to make a decision every day. Sometimes that decision is to take no action—but a lot of times it’s not. I actually find that pretty compelling.
What was your first foray into fixed income?
After the fund accounting role, I eventually moved onto a trading desk and started trading a variety of different fixed income sectors. I then came to Standish (now Mellon Investments Corporation), about 15 years ago, to trade non US rates and non US credit, which was different for me because I’d always traded US fixed income. Honestly, I thought I’d be trading for a long time but I was fortunate to have an opportunity to move into a fixed income portfolio management role.
What was a defining moment in your career?
Dave Leduc, who was leading the global fixed income team at the time, did quite a good job of navigating the global financial crisis. It was a differentiator for us. It meant that demand for the product picked up and we were able to add people to the team. This afforded me the ability to gain more leadership responsibility and take on management responsibility. I would say that was a key moment in history, where things lined up and, fortunately, Dave had confidence in me to help him to navigate that period, which ultimately afforded me the opportunity to move from trading into portfolio management.
Describe your investment style.
I view fixed income as an asymmetric asset class. Understanding that it’s asymmetric prompts me to be cognizant of mitigating downside risk. From a style standpoint, we tend to do well when we have big dislocations in the market and we try not to take on a huge amount of risk when volatility is low. We place confidence on our ability to take advantage when those dislocations occur. When that happens, we try to be aggressive and go in aggressively on sectors with the most dislocation. It’s about having the discipline to be relatively conservative when the market isn’t affording you tremendous opportunities—but then when it does present opportunities, to be aggressive.
What past experience outside of portfolio management do you bring to your process?
Throughout college, I worked at UPS where I was loading trucks at night during the week. It was very physically demanding and took up what should’ve been my prime time to do homework. That was a big challenge to organize my time and get everything done but it really taught me the importance of work ethic as well as how to prioritize. That period of three or four years revealed a lot about time management and the importance of loyalty to an employer.
What would set off warning bells when looking at a new investment?
When I listen to analysts and I feel the tone changes, becoming slightly negative. I believe it can signal there’s a shift in dynamics for what’s going on—whether it’s a country, company or bond. I’d rather be quicker to get out when that narrative shifts, rather than hold through and possibly become a forced seller at much lower levels. When you sense that shift, it can potentially be beneficial to be relatively quick to cut exposure.
What is it that attracts you to global fixed income investing?
I get excited about the breadth and depth of the universe. There’s a variety of macro decisions that need to be made. There’s also a variety of different instruments you can use to express that decision. Some bonds may be denominated in euros, some in dollars—some are senior bonds and some maybe subordinated. Once you make that decision, there are micro decisions to be made about more nuanced ways to express that. A variety of decisions exist, and if you multiply that with an infinite number of issuers in the global market place, it creates a very exciting asset class. It’s sort of like playing 3D chess. There are so many different dimensions to global fixed income.
Asset allocation and diversification cannot assure a profit or protect against loss in declining markets.
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All investments involve risk, including the possible loss of principal. Bonds are subject to interest-rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines. Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries. High yield bonds involve increased credit and liquidity risk than higher-rated bonds and are considered speculative in terms of the issuer’s ability to pay interest and repay principal on a timely basis. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid, and difficult to value and there is the risk that changes in the value of a derivative held by the portfolio will not correlate with the underlying instruments or the portfolio’s other investments.
Fixed income: A type of investment security that pays investors fixed interest payments until its maturity date. Credit market: The market which companies and governments issue debt to investors, such as investment grade bonds, high yield bonds, and short-term commercial paper. Spread: The gap between the bid and the ask price of a security or asset, like a stock or bond. Credit: A contractual agreement in which a borrower receives something of value now and agrees to repay the lender on a later date—generally with interest. Yield: Earnings generated and realized on an investment over a particular period of time, and is expressed in terms of percentage based on the invested amount of the security.
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