Spotlight on Alex Thompson, Vice President, Loomis, Sayles & Company
Global Thought Leader Spotlight
Alex Thompson, Vice President, Loomis, Sayles & Company
In my role as Investment Director for the Alpha Strategies team at Loomis, Sayles & Company, I am responsible for supporting the growth and retention of multi-asset credit, systematic credit and emerging market debt blended total return strategies through strategic product planning and development, market education and product messaging.
My objective is to explain our investment philosophies and investment processes to clients and prospects. Furthermore, I aim to faithfully represent the views and opinions of our portfolio managers in discussing past performance, current positioning and investment outlooks, where applicable.
The Need for a New Investment Philosophy
It is our belief that markets move in cycles, and we define a cycle as having four distinct phases:
Downturn
Credit Repair
Recovery
Expansion/late cycle
Depending on the strategy in question we either look to optimise portfolios for different phases or build strategies that are resilient throughout the cycle.
How long is a cycle though? How long do the different phases last? What triggers a move between cycles? These are not new questions, but, arguably, financial markets have evolved such that hindsight may not be much help. In the post great financial crisis era, we have seen unprecedented monetary experiments and fiscal largesse, an explosion in private markets investments and the emergence of big data and AI.
Investing today sees markets move faster to price information, often incorrectly and before the ‘fundamental’ data shows up. Where previously, investors could observe valuation opportunities over a period of weeks, if not months, now markets can blow out and retrace in a matter of days, if not hours!
This calls for a new approach that incorporates more market-based indicators, more quantitative tools and a faster decision-making framework, both on the part of the investor and the investment manager.
We are not advocating for day trading here, there remains merit in taking a long-term perspective. It is merely an acknowledgement that investment philosophies, processes and tools must evolve. Something that may have worked 10 years ago may be outdated in the modern era.
Implications for Institutional Investors
Quantitative tools have always had a place in public fixed income given the multitude of risks that investors can take or look to hedge. Historically these tools have, by in large, been used to screen universes for desired characteristics or to monitor different risks or sensitivities. They are, by their nature, backward looking but using ever expanding data sets, they can be used for forward looking scenario analysis and stress testing.
Our essential point of conjecture here is that in conjunction with ever more interconnected financial markets, the data is becoming so vast and computational power so great that we believe any strategy that is not taking advantage of modern-day quantitative tools is in danger of getting left behind, irrespective of how they have performed in the past.
It is not simply enough to have a staff of PhDs on hand, it is the combination of data scientists and mathematicians alongside seasoned market practitioners that act as the key resource for conducting such analysis. Additionally, it is important for tools and associated insights to be readily explainable.
So, the next time you meet with your active manager, ask them about their quantitative tools, the resources they bring to bear and what difference it makes to their portfolio positioning.
Crucially, probe on what has changed considering the breadth and depth of data now available across the marketplace.
Alex will be presenting at Global Investment Institute’s upcoming Fixed Income & Alternatives Investment Forum, taking place on Thursday, 12 September 2024 at the Grand Hyatt Melbourne, Victoria.
To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
Alex Thompson, Vice President, Loomis, Sayles & Company*
Alex is a Vice President of Loomis Sayles Investments Limited, Loomis Sayles’ London-based entity, and a product specialist for the institutional services team. He is responsible for providing product expertise to the marketplace interfacing with prospects, clients and intermediaries/advisors, predominately across institutional channels in the EMEA region.
Alex joined Loomis Sayles in 2016 from Mercer, the global investment consultant, where he led the European fixed income manager research team. Prior to joining Mercer in 2007, he was a manager researcher at Aon in London, covering various investment strategies.
Alex earned a BSc in applied economics from the University of Plymouth Business School and has passed the Investment Management Certification (IMC) qualification.
*Loomis Sayles is an affiliate of Natixis Investment Managers
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Loomis, Sayles & Company Disclaimer
Loomis, Sayles and Company, L.P. (Loomis Sayles) is a wholly owned subsidiary of Natixis Investment Managers AFSL 246830. Loomis Sayles is exempt from the requirement to hold an Australian Financial Services Licence under the Corporations Act 2001 (Cth.)
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