On Wednesday, April 18th, the CFA Institute of Washington, DC, held the latest installment of it’s “Lunch with a Legend” series. The speaker was Dan Fuss, CFA, CIC of Loomis, Sayles & Company, who discussed the present state of the investment landscape and factors to pay attention to for the future. With 59 years of experience in the investment profession, Dan is currently the Chairman of Loomis, Sayles’ Board of Directors and manages the firm’s flagship bond fund, among others. He is one of the most respected bond investors in the country and has been the recipient of numerous awards, including the 2009 Morningstar Fund Manager of the Year award in the fixed income category, the Institutional Investor Money Management Lifetime Achievement Award, and the Lipper Excellence in Investing Award. Dan was introduced by Leigh Talbot of New Century Advisors, a former member of Dan’s team at Loomis, Sayles, and the talk’s moderator.
Dan’s talk centered around four basic themes that will continue to impact the bond market on a go-forward basis: Peace, People, Politics, and Prosperity. Discussing the relative peace in the world, or the potential lack thereof, Dan first expressed his opinion that this would be the most powerful of the aforementioned four factors to affect the investment landscape. He touched on several possible sources of geopolitical tension or conflict, including the relationship between the US and China and conflicts between other state and non-state actors.
Speaking thematically about “People”, Dan discussed the frictions created by an ageing population and migration patterns in different regions of the world (i.e from Africa to Europe, from the Asian steppes to other parts of Asia, and from Central America northward). Also regarding “People” he spoke about the young increasingly supporting the ageing, and the increase in opportunity for immediate employment for the young due to technological change and educational opportunities.
In Dan’s view, this was a less important factor than “Peace”, and created mostly frictions, but some opportunities. Regarding “Politics”, Dan spoke about a high level of political uncertainty in the world, expressing concerns about the potential loss of political cohesion in the EU, the US, and elsewhere.
Finally, regarding “Prosperity”, Dan spoke about a reasonably healthy global economy with low unemployment and relatively low inflation, with a potential threat coming from trade protectionism and retaliatory measures.
Dan’s talk was followed by a brief Q&A session, where he illuminated on various aspects of the four themes previously discussed.