* Kathleen Gaffney approached Eaton Vance several months ago
* Gaffney co-managed $22 bln at rival firm Loomis, Sayles
By Ross Kerber
BOSTON, Oct 23 (Reuters) - Fund manager Kathleen Gaffney, once considered the most likely successor to Loomis, Sayles & Co star bond picker Dan Fuss, is joining rival Eaton Vance to develop new multi-sector products.
Gaffney, 50, first approached her crosstown peers in Boston several months ago, said Eaton Vance chief income investment officer Payson Swaffield in an interview on Tuesday. Loomis Sayles disclosed Gaffney had left in a regulatory filing on Monday.
At Eaton Vance, Gaffney will develop and then serve as lead portfolio manager of a team overseeing new multi-sector funds that will draw on the firm’s current lineup of products including high-yield bond funds, floating-rate bank loan funds, global bonds and currencies, taxable municipal assets, and absolute return funds.
“Kathleen has a unique knowledge across all of these sectors,” said Swaffield, Gaffney’s new boss. “That skill-set is complementary to what we have at Eaton Vance right now. It’s quite a good fit.”
For their part Loomis Sayles executives suggested Gaffney left in search of a new role as the firm moved away from its traditional star-manager system.
At Loomis, Gaffney had co-managed with 79-year-old Fuss the firm’s flagship $22 billion Loomis Sayles Bond Fund since 1997. Although the fund stumbled in some years during the financial crisis, it has beaten 91 percent of similar funds over the past 10 years, according to Morningstar.
Fuss, who started at Loomis in 1976, has no plans to retire, spokeswoman Erin Heard said. In March, Thomson Reuters unit Lipper awarded Fuss its excellence in fund management award. In 2010, Fuss was a runner up for Morningstar’s fixed income manager of the decade awarded to Pimco’s Bill Gross.
Gaffney’s new effort in the popular multi-sector category would address a missing element in Eaton Vance’s current fixed income line up, said Eric Jacobson, a Morningstar analyst who has followed funds for both firms. The firm is already well-known for funds in some areas including municipal and high-yield bonds as well as bank loans.
The lack of many multi-sector products is “definitely a hole in their lineup,” Jacobson said.
The new Gaffney-led funds, to be offered to institutional and retail investors, will put Gaffney in competition not just with her old firm but also with top multi-sector funds from Pimco, Fidelity Investments and Franklin Resources Inc, according to data from Thomson Reuters’ Lipper unit.
The daughter of an advertising salesman, Gaffney grew up in Connecticut and studied economics at the University of Massachusetts at Amherst. After working as a grocery store cashier, she landed a job at Loomis Sayles in 1984 and began running money in 1992.
Gaffney did not return messages seeking comment on her move.
In addition to Fuss and Gaffney, Loomis Sayles had added two more managers to the mainstay bond fund in 2007, Matthew Eagan and Elaine Stokes.
Recently both other managers -- but not Gaffney -- were made “team leaders” of the firm’s own multi-sector group, Jae Park, Loomis Sayles chief investment officer, said in an interview.
The promotions were in part a recognition of the two managers’ use of new research capabilities Park had created as he moved Loomis Sayles away from its former star manager system, Park said.
Park would not address Gaffney’s departure directly. “There were people who wanted to hold on to the old ways,” he said.
Loomis Sayles is a unit of Natixis Global Asset Management, which is part of the Natixis SA subsidiary of BPCE, the second-largest banking group in France.