Fidelity Manager Announces Retirement
After more than 20 years at Fidelity, high-yield bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. fund manager Matt Conti has announced his plans to retire at the end of 2018.
Conti manages or co-manages a handful of Fidelity’s bond funds, including the $32 billion Total BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. fund, where he is the second-longest tenured manager. He has been managing Focused High Income since 2004.
To provide a smooth transition leading up to and following Conti’s retirement, Mike Weaver has been appointed to co-manage Advisor High Income, VIP High Income Portfolio, Fidelity and Fidelity Advisor Total Bond and High Income Central Fund. Conti will continue to co-manage the funds until his last day at the end of December.
We don’t anticipate any changes in how the portfolios are managed leading up to or following Conti’s departure. Weaver’s investment style is very similar to Conti’s, and relies on the same high-yield research. Weaver utilizes bottom-up fundamental credit analysis, and believes that higher-quality businesses deliver better riskThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline. and reward characteristics over time while employing a consistent, conservative approach. He currently manages Global High YieldYield is a measure of the income on an investment in relation to the price. There are several ways to measure yield. The current yield of a security is the income over the past year (either dividends or coupon payments) divided by the current price. Investment Trust at Fidelity for Canadian investors and oversees other institutional high-yield portfolios.
Weaver has worked in the investment industry for two decades as a manager, co-manager and research analyst, among other roles. Given his experience and the track record of the remaining portfolio managers on Total Bond, we expect a smooth transition.
Kevin Nielsen will co-manage Short Duration High Income with Conti and Matthew Bartlett until Conti’s departure. At the time of his appointment, Nielsen co-managed leveraged loan portfolios for investors in Europe and Canada. He has worked with Conti for several years and shares a similar investment style. Nielsen’s focus is mainly on companies with predictable cash flow, good management, attractive fundamentals and stable positions in the market, and he invests to generate income with an eye to mitigating risksThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline..
The new co-manager appointments were effective as of April 2.
Fidelity plans to announce Conti’s replacement at Focused High Income sometime in the third quarter of 2018. While manager retirements are often a valid cause for concern among fund shareholders, Fidelity has proven mostly adept at placing replacements soon enough that there is little disruption for investors, especially on multi-managed funds like Total Bond.
Changes in Vanguard’s Fixed Income Group
In other retirement news, on March 23, Vanguard announced new appointments within its global fixed income team as a result of Ken Volpert’s plans to leave the firm in August. Since 2014, Volpert has been the global head of fixed income indexing and head of investments in Europe. His departure prompts the rotation of Vanguard veterans outlined below.
Succeeding Volpert will be Paul Jakubowski, who is currently the global head of credit. He’ll take on Volpert’s role as global head of fixed income indexing, making him responsible for all of Vanguard’s bond indexing around the globe. Jakubowski has worked at Vanguard since 2000.
Head of Municipal Investment Christopher Alwine will take over Jakubowski’s role, overseeing Vanguard’s active corporate bond portfolio management and trading groups. He also manages its global taxable credit research group and the stable value group. He’s been with Vanguard since 1990.
Paul Malloy slots into Alwine’s current role leading the 30-person municipal bond group, who manage over $183 billion among 12 municipal bond funds. Malloy enters that position after serving as head of fixed income–Europe. He joined Vanguard in 2005.
Finally, effective April 2, Christopher Wrazen, who managed $103.5 billion at the Total International Bond Index fund, moved across the pond to manage the bond index group in Europe. Wrazen had co-managed nine Vanguard funds with Joshua Barrickman, who serves as head of fixed income indexing–Americas. Barrickman became sole manager of the following funds upon Wrazen’s move to the U.K.: Short-Term Corporate Bond Index, Intermediate-Term Corporate Bond Index, Long-Term Corporate Bond Index, Short-Term Bond Index, Long-Term Bond Index, Total International Bond Index, Emerging Markets Government Bond Index, Total Corporate Bond and Balanced Index.
Given the depth of Vanguard’s indexing team, and the capability Barrickman has shown during his tenure, we don’t expect to see any dramatic impact on strategy or investment approach now that he’s flying solo.
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