BlueBay’s approach to fixed income with Mark Dowding

October 2018 - Transcript

What is your approach to fixed income, and how do you gain an edge?

Mark Dowding:

Well, I would say that at BlueBay, we are investors, we’re not traders. We are very much running a team-based investment approach. I don’t believe in star fund managers. We operate as a team. We want to bring the resources of the team to bear across all of the strategies that we manage. Clearly having a very robust investment process with risk management is hard but it’s also something that is very important to your success. But ultimately it comes down to having investment skill. In terms of delivering alpha in fixed income and alpha is what we need to be about because we think we’re in a world where the beat of opportunity is much less than it once was. In delivering that alpha, ultimately, we need to manifest skill so we need to have talented risk-takers within our team to deliver the good results. But if we’re able to operate in a structured and repeatable way, then we believe that we can really serve our investors’ needs very well indeed.

Can you give an example of this?

Mark Dowding:

An example of this would be looking very much at what’s going on in Europe. One of the things that I’ve really observed is that a lot of people who are investing in markets today tend to be Anglo-Saxons and as Anglo-Saxons we all tend to be euro-haters in one way or another because we look at Europe and we look at a continent with lots of different countries, different languages, different cultures, different ways of doing things and maybe a history of not liking each other and fighting one another. We look at this monetary union as a project without a fiscal political reunion alongside it. And we say surely this is a bad idea, surely this is going to end in tears. And so both within the established media and also in financial markets, we’ll see this inherent skepticism around Europe and a desire to look for European break up trades. Often, I think that in interacting with policy makers, we can see situations where the market looks like it’s heading in one direction but the policy community is heading in a different direction and therefore knowing when it’s right to take a contrarian view I think can often lead to a lot of opportunities and this all comes back to the proprietary research that we are undertaking. We are very much relying on our own insights, not the insights that are coming from others, but very much our own investment research is really fundamental and is driving the risk-taking that we’re manifesting within our investment process.