David Leduc, CFA
Active fixed income CIO at Mellon
32 years of experience
Joined Mellon in 1995
Dave Leduc, CIO of active fixed income at Mellon, reveals the career-defining moment everything changed as well as why he isn’t playing guitar at the next Newport Jazz Festival.
How did you end up pursuing investing as a career?
I wanted to go to Berklee College of Music to pursue being a jazz guitarist and my father said, “No dice because you’re going to end up a wedding singer.” Instead, I went to the University of Rhode Island where I took finance classes and it just resonated with me. It was the 1980s and there was a lot going on with Wall Street. I realized I had a knack for the mathematical aspect of investment topics and I was fascinated by it.
After college, I accepted a job with State Street in their accounting department before being selected for their credit training program. After working in commercial lending as a corporate analyst and completing graduate school, I moved into an area that eventually became part of State Street Global Advisors, managing money for 401(k) assets. I was responsible for credit analysis of financial institutions and counterparties and modeling derivatives and mortgage investments.
What was your first foray into fixed income?
While my experience with fixed income began at State Street, after a few years I wanted to do something different so I applied to other investment firms. I landed at Standish Ayer & Wood (Mellon’s predecessor), which I joined in 1995 as a junior portfolio manager and investment analyst. After some time, because I had mortgage and derivatives experience, I moved into their structured assets group and was later named the head of that group. Every chance I had, I made attempts to expand my skillset and gain exposure to different areas.
What was a defining moment in your career?
In the late 2000s, the global fixed income group began to grow assets, in part due to our performance navigating the Global Financial Crisis. Prior to this point, we were one of those underdog teams but Brendan (Murphy) and a few other talented people on the team anticipated a lot of things that happened in the financial crisis. We were able to reduce risk going in and take advantage of some pretty big dislocations afterward. At the end of that period, Des Mac Intyre identified me as a potential successor to the then CIO. In 2010, my predecessor departed and I was appointed the CIO of active fixed income.
What do you like about working in asset management?
I’m drawn to many aspects of it. I’m excited when the team and I make a decision on the markets or an investment thesis, and that plays out. When we’re doing well because we’ve collectively figured it out, I really enjoy that. I like everything that goes into it too—even reading reams of economic reports. I’ve always liked the analytical bit. When all of the work culminates into successful investment outcomes—that’s gratifying. I also enjoy engaging with clients and traveling to meet them. It’s the dynamic nature of both markets and client relationships that keeps me interested.
Describe your investment style.
I like to do things where the probability of success is stacked in my favor. I wouldn’t walk into a casino and put down money on a game with bad odds that I knew nothing about. I need to know more than other people about the fundamentals. It’s the same when investing. My chance of success is higher when I find something misunderstood and discounted in price, relative to what it should be. If the market is lined up against it, that’s good too because there should be a contrarian element.
What experience outside of portfolio management do you bring to your process?
I played in jazz and rock bands in high school. In a band, the music you produce doesn’t come out right if each person is in their own world, not listening to each other. It comes together when all members practice with one another, listen, and understand how one another plays. I enjoy working here because we largely operate in the same way. This isn’t a firm of stars and individuals, or people closing doors and trying to beat the guy in the office next door. As much as it’s competitive and we hold people accountable, the firm wins when we’re all working together—when we’re all in the bandstand listening to one another.
What are some traits you think are most important to being a leader?
I think leaders should communicate well and share the burden of their team. I have to be willing to work either as late as or later than my team. I should be willing to travel as much as others and carry the burden that I ask others to carry. A very famous Prussian cavalry commander once said something like, “You need to know how to do everything your trooper does—down to brushing a horse— because it’s only through doing and sharing all those responsibilities that you gain their respect.”
What do you appreciate about working at Mellon?
It’s full of people who are truly dedicated to finding the secret sauce of investing and doing it in a team environment. I was attracted to Standish Ayer & Wood (now Mellon) because they were driven by investing and a sense of duty to their colleagues and clients. I believe that still exists. Most of the people here are driven by a deep curiosity of figuring out investment markets as well as how to translate that into good client outcomes.
Asset allocation and diversification cannot assure a profit or protect against loss in declining markets.
Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. To obtain a prospectus, or a summary prospectus, if available, that contains this and other information about a fund, investors should contact their financial advisors or visit im.bnymellon.com. Investors should be advised to read the prospectus carefully before investing.
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.
BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally. More information can be found at www.bnymellon.com.
Mellon is a global multi-specialist investment manager dedicated to serving our clients with a full spectrum of research-driven solutions. Mellon Investments Corporation (Mellon) is a registered investment adviser and an indirect subsidiary of The Bank of New York Mellon Corporation.
Views expressed are those of the advisor stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Mellon and BNY Mellon Securities Corporation are subsidiaries of BNY Mellon. ©2019 BNY Mellon Securities Corporation, distributor, 240 Greenwich Street, 9th Floor New York NY, 10286.