NEW YORK (Reuters) - A former top Loomis Sayles & Co bond manager and once-heir apparent to high-profile investor Dan Fuss is heading a new core bond fund launched by rival Eaton Vance Management, Eaton Vance Corp said on Thursday.
Kathleen C. Gaffney, who managed the $22 billion Loomis Sayles Bond Fund along with Fuss, the firm’s vice chairman, is heading the Eaton Vance Bond Fund. It is her first role as a lead manager since joining Eaton Vance last October, an Eaton Vance spokeswoman said.
The fund is Eaton Vance’s first unconstrained bond fund, the spokeswoman noted, and can invest across all fixed-income types. It may invest at least 80 percent of its assets in bonds, including 35 percent in high-yield “junk” bonds, according to the fund’s prospectus. The fund may also seek 20 percent exposure to equity securities.
Gaffney told Reuters that recent high demand for stock funds could be a sign of things to come, and that the fund’s ability to hold stocks allows it participate in a potential rally.
“I think this is the beginning of a trend that could have very long legs,” she said.
The first three weeks of January brought $14.9 billion into U.S.-based stock mutual funds, the biggest three-week streak since the start of 2001, when the funds attracted $16.3 billion, Lipper data shows.
Gaffney co-managed a total of $84 billion at Loomis Sayles & Co, the firm’s spokeswoman, Erin Heard, said at the time of Gaffney’s departure. Loomis Sayles, a unit of Natixis Global Asset Management, now oversees $186.1 billion in assets, according to the firm’s website.
Fuss is known for his deep research on corporate bonds and scoring huge bets on undervalued debt securities, such as Irish government bonds, which he began purchasing in late 2010.
Gaffney said that her investment approach has not changed since leaving Loomis Sayles, and that she continues to focus on value-oriented, research-driven security selection.
Eaton Vance Corp had $238.4 billion in assets as of December 31, 2012. Gaffney, a vice president and co-director of investment grade fixed income for the firm, started as a co-manager of the Eaton Vance Strategic Income Fund.
Gaffney said she is optimistic that the global economy will find a balance this year, as developed economies see better growth while growth in emerging economies slows.
“The theme for 2013 is really diminishing risks around the globe and a restoration of balance,” she said.
Gaffney said that low yields on safe-haven assets are unsustainable as investors become more optimistic on the U.S. economy. She also plans to seek corporate bonds in Europe, which she said offer attractive yields.
The European debt crisis, she said, has improved greatly. “The concerns about Europe have been significantly reduced,” Gaffney said, citing the European Central Bank’s three-year loans of more than $1 trillion euros to banks and ECB President Mario Draghi’s statement last July that Europe is eyeing greater political union.
Gaffney will manage the Eaton Vance Bond Fund with Stephen Concannon, vice president and high yield portfolio manager, and Michael Turgel, vice president and senior bank loan credit analyst, the company’s press release said.
Reporting by Sam Forgione; Editing by Dan Grebler