CFALA Event Highlights: Fireside Chat with Dan Fuss

February 9, 2015

If you own bonds or have been thinking about investing in bonds, you need to pay attention to anything Dan Fuss says. Dan is the lead manager of the well renowned Loomis Sayles Bond Fund. For me, Dan is the best bond mutual fund manager of all time. He is one of my heroes. He has won multiple accolades in his 40+ year career, including Morningstar Mutual Fund Manager of the Year. More importantly, his fund’s risk-adjusted results are among the best in the business. He has been sometimes introduced as “The Warren Buffett of Bonds”, but I have a feeling he just wants to be known as Dan Fuss.


Last week, Dan was so generous sharing his time, thoughts and wisdom with CFALA. He even signed the picture I had with him from last year.


Here are the highlights from the event:

  • Should you buy bonds?
    • There is no right or wrong answer. It depends on your needs.
    • Note that the US had negative interest rates in the mid 1930s.
    • The long-term investor should wait for the bond market to collapse before buying.
    • The short-term muni-market (5 years or less) is ok.
  • What are the changes in his portfolio?
    • The average maturity has decreased from 12-13 years to just 6.5 years in the last 24 months.
    • The currency position is smaller.
    • The fund is less market sensitive.
    • There is an increased focus on individual security risk and buying power reserve.
    • He doesn’t like structured products.
  • What will the Fed do?
    • For those of you who pray at night, toss in the Fed.
    • He repeatedly mentioned he doesn’t know, but in the end, he guesses that the Fed may raise short-term rates, resulting in a flattening the yield curve.
    • The Fed plays an international role. Its decisions affect more than just the US.
  • What about oil?
    • Opportunities in oil, but you really need to know your companies.
    • You need to do a scenario analysis of different oil price levels.
    • Don’t use leverage.
    • Buy and hold for a long time.
  • What influenced him the most?
    • You learn from people you work with.
    • He learned from his Dad, his son and his wife.
    • He learned a lot from the Navy. He always remembers that he must “walk the decks”.
  • Other highlights
    • He guesses that the spike in the USD is over.
    • The potential for volatility has increased.
    • Moving the markets with trades, particularly in long-term treasuries, is easier today.
    • There is a negative correlation between turnover and performance for both stock and bond managers.
  • Other personal stuff
    • He wakes up at 420AM (used to be 4AM) every morning to prepare for his daily morning meeting with the traders.
    • He hopes to work for Loomis Sayles for a very long time.
    • He will continue working as long as he can challenge others and is challenged by others.
    • He has a passion for advancing neurological research.


I hope you found this recap helpful. If you know someone who is investing in bonds or thinking about investing in bonds, let them know what the best bond manager in the world is thinking.


If you know someone who is retired or about to retire, they will be interested to read this post, so share it with them.


If you know someone who is just interested in investing in general, they will want to know what Dan is saying. Help them with their investment their investment thinking by sharing this post.

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