Full Discretion
Our Philosophy
We have a legacy of independent thinking and leaning into the market when others may be pulling away. We take a deep-value, equity-like approach to credit selection across global fixed income markets. Our disciplined process helps gives us confidence in seeking to identify macro trends, formulate a clear view on market sectors, and invest throughout the credit cycle.
For more than 40 years, we have been applying our distinctive style of bond picking to deliver portfolios designed to provide excess yield potential and have low correlations to traditional benchmark-focused fixed income strategies.
The Full Discretion Approach to Credit Selection
During our decades as bond investors, we’ve managed through all sorts of credit conditions. And we have
consistently observed that the market is inefficient at pricing specific risk.
We use repeatable credit selection strategies to capitalize on this persistent inefficiency and drive excess return potential.
Extra Credit
Donald Trump has been elected as the 47th president of the United States and Republicans have retaken control of the Senate. While the House of Representatives has yet to be decided, we believe it is likely that Republicans could maintain a narrow majority based on how current polling has evolved. The initial market reaction has been in line with Trump’s expected policies on tariffs, taxes, deregulation, immigration and government borrowing, which has led to a move higher in Treasury rates, in our view.
Loomis On Loans
The loan market saw another quarter of strong performance, once again buoyed by the high interest rate component of floating rate loans. Loan prices continued to remain near par as investor sentiment remained positive and loan market technicals provided stability. B-rated loans outperformed BB-rated loans, mainly driven by higher spreads, though the gap in average price between BB- and B-rated loans increased during the quarter as BB-rated loan prices advanced and B-rated loan prices declined slightly.
The Case for Strategic Alpha
We believe the flexibility of an unconstrained fixed income strategy can offer investors the ability to achieve multiple investment objectives throughout the course of a cycle.
Core Plus Full Discretion: A Differentiated Approach
An extended period of low interest rates and, more recently, an increase in interest rate and spread volatility has investors re-thinking their approach to “core” fixed income strategies, in our view.
Quarterly Credit Update
Interest rates were, once again, pushed higher in the second quarter of 2024 as inflation data continues to remain sticky and the probability of the Federal Reserve’s (Fed’s) cutting cycle will be pushed out further. Our view of the credit cycle is unchanged in the ‘late cycle’ stage.
Full Discretion Team
Range of Institutional Strategies and Mutual Funds
The Loomis Sayles Full Discretion team were among those who pioneered multisector investing with a long-term, flexible, benchmark-agnostic approach. The team manages a range of institutional strategies and mutual funds to help meet different investor needs.
What are Innovative Ways to Approach Diversified Credit?
Portfolio Manager Brian Kennedy discusses the broad palette of opportunities available to credit investors.
Are Securitized Assets Playing a Bigger Role in Asset Allocation?
Portfolio Manager Brian Kennedy shares why he thinks the expansion of securitized assets can add diversification and opportunity.
Extra Credit: Cable is Dead? Hardly…
2 August 2024
We often get questions from clients on our view of the cable industry. With so many consumers “cutting the cord” and new competition emerging, many expect a complicated path ahead for the sector. While we agree there appear to be challenges near term, we believe the long-term outlook for the cable industry could be positive.
Surprises from the First Half of 2024
Several of our fixed income portfolio managers share unexpected developments that have shaped their view of the credit markets.
Four Signals on Our Radar
Our investors are watching how monetary policy, consumer health, earnings and profits will come together to drive the cycle and asset markets.
What is the Market Mispricing?
Markets sometimes move away from fundamentals. Our investors key in on areas that may be overemphasized or underappreciated.
Extra Credit: Spotlight on Full Discretion Engagement
30 June 2024
With respect to Loomis Sayles’ fixed income strategies, our centralized Credit Research Team conducts the majority of the engagements. Additionally, the Full Discretion Team’s dedicated Research Analysts focus on engagements with the companies where we have expressed overweight investment positions or themes.
Bank Loans: Looking Beyond Interest Rate Expectations
Investment Director Cheryl Stober outlines the potential advantages and risks of bank loan investing and the roles that a bank loan allocation can play in a fixed income portfolio.
Asset TV Fixed Income Masterclass:
FOMO in Credit Markets
How are corporate fundamentals, demand technicals and discount dollar prices playing out in the investment grade bond market? Portfolio Manager Brian Kennedy weighs in.
Bank Loans Outlook: On Firm Footing
Investment Director Cheryl Stober shares her team's expectations for defaults, supply/demand technicals and bank loan return potential in 2024.
Extra Credit: 'EV’ is the Future, and We Don't Mean Electric Vehicles
20 December 2023
When it comes to portfolio construction, the Full Discretion team has long employed a combination of bottom-up security selection and top-down, macroeconomic analysis. We utilize a credit cycle framework to evaluate the factors driving the cycle, anticipate broad sector mispricings and seek to take advantage of changes in risk premium at every stage. This process helps us identify the risk drivers we want to emphasize, or seek to avoid, in our portfolios and lays the foundation for our overall risk assessment. Enterprise value is the anchor by which we conduct our bottom-up fundamental analysis.
Core Plus Bond Fund & Investment Grade Bond Fund Highlights
The Full Discretion and Relative Return teams both utilize a credit cycle framework and input from Loomis Sayles research analysts, including credit, securitized and macro, to help inform their respective investment decisions; however, their processes are distinct, resulting in differentiated performance objectives and outcomes.
Rethinking The Fixed Income Playbook For Insurers
The last ten months have shaken the traditional core fixed income playbook. We think it's time to consider a more thoughtful approach to fixed income allocations in insurance portfolios.
In Case You Missed It: A Conversation With Full Discretion's Portfolio Managers
On December 9, 2020, Full Discretion portfolio managers Elaine Stokes, Matt Eagan and Brian Kennedy joined Jim Sia, Head of Relationship Management, for a live call with institutional clients and consultants to discuss Dan Fuss’ step back from portfolio management, the deep investment resources of the Full Discretion team, and the team’s outlook going into 2021.
Credit Check: The Full Discretion Approach To Credit Selection
Credit markets are frequently moving. During our decades as bond investors, we’ve seen them frozen during times of crisis, frothy when investors have seemed desperate for yield, and everything in between.
Matt Eagan's LinkedIn Articles
Explore the deep-dive articles written by Matt Eagan on LinkedIn.
“Covenant-Lite” Loans:
Credit Quality Is Still the Dominant Factor
The Bank Loans Team is often asked about covenant-lite loans. The team shares their views on what they are and are not.Explore More of the Full Discretion Team Members.
Meet the 28 investment professionals whose experience and expertise help drive alpha across Full Discretion strategies.
Call it art or call it a philosophy; we consider it to be both. Fundamental research is the cornerstone of everything we do and believe in.
LandScape
Disclosure
Any opinions or forecasts contained herein reflect the current subjective judgments and assumptions of the Full Discretion Team only, and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.
Market conditions are extremely fluid and change frequently.
Any investment that has the possibility for profits also has the possibility of losses, including the loss of principal.
Commodity, interest and derivative trading involves substantial risk of loss.
Diversification does not ensure a profit or guarantee against a loss.
Past performance is no guarantee of, and not necessarily indicative of, future results.
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