The 'Warren Buffett of Bonds' Is Stepping Back From Fund Management

Dan Fuss, the legendary fund manager considered the Warren Buffett of bonds, plans to step away from portfolio management at Loomis Sayles after more than four decades at the firm.

Fuss, 87, will leave as co-manager of the flagship $9.1 billion Loomis Sayles Bond Fund, which was once one of the top performing funds in its class. He will no longer serve as a manager of any of the firm’s mutual or offshore funds, the Boston-based company said in a note Monday.

The 'Warren Buffett of Bonds' Is Stepping Back From Fund Management

The changes are effective March 1. Fuss is not retiring and will remain a senior adviser. He also will remain engaged as vice chairman, executive vice president and a member of the firm’s board of directors, Loomis Sayles said.

“This is the latest phase of the Loomis Sayles portfolio management team’s succession plan, which has been in place for more than 20 years,” the company said.

Fuss is well known both for his longevity -- his investing career spans more than six decades -- and for the rigorous, fundamental research he uses to assess the credit risk of the bonds he buys. He’s equated the process to stock-picking.

In a career that has run from the great financial crisis and hyper-inflation in the 1970s to the coronavirus-driven economic recession, Fuss is known for being right in bearish and bullish calls.

A year before the collapse of Lehman Brothers Holdings Inc., he warned that LBO debt was a bubble waiting to burst. He also bet big on a comeback for European governments laid low by the sovereign-debt crisis, pocketing an estimated 65% on Irish government bonds after buying them at distressed levels in 2010.

Loomis Sayles Chief Executive Officer Kevin Charleston said Fuss’s leadership at the firm has been unmatched, particularly in how he handled the darkest days of the global financial crisis of 2008.

Instead of panicking, he reminded traders that the crisis could provide some investment opportunities for the firm, he said.

“He was on the trading desk giving everybody confidence that the world wasn’t ending,” said Charleston. “There was a lot of palpable fear. But that’s not Dan.”

A former Navy signal officer, Fuss and his Bond Fund team have repeatedly topped peers. The fund, which he began managing at inception in 1991, has posted an annualized return of about 8.4% versus since starting. That compares with about a 6% gain in the Bloomberg Barclays U.S. Government and Credit Index. This year his fund is up 1.4%, putting it in the bottom 9th percentile in its class, according to data compiled by Bloomberg.

In 2000, Fuss was named to the Fixed Income Analysts Society’s Hall of Fame.

The other funds he will no longer help manage include the $660 million Fixed Income Fund, the $530 million Institutional High Income Fund and the $240 million Investment Grade Fixed Income Fund.

He will also leave the Loomis Sayles Global Allocation Fund and the Strategic Income Fund, according to a regulatory filing.

Two years ago, Fuss exited as one of the managers of the Loomis Sayles Investment Grade Bond Fund.

©2020 Bloomberg L.P.

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