MARKET COMMENTARY

Five Questions with Jeff MacDonald

11.11.2020

1. As a senior member of the Investment Management Team, what do you find particularly interesting about building portfolios for clients?

When it comes to building things like cellphones, success is measured by the precision of the process. You essentially build the same phone today as you built three months ago. However, success as a portfolio manager is not about building the same portfolio over and over again. The end product is constantly changing.  Today’s well-built portfolios may not meet client objectives in tomorrow’s market.   That forces me to constantly stay aware of current events and their possible impact to clients.  It also keeps me energized as financial markets never stop moving.  

2. How did you decide to pursue the career you are in today?

Political and economic topics have always intrigued me so studying public policy in college was a natural fit.  Learning about the driving forces in the economy and the politics that helped to shape them really grabbed my attention. After graduation, I landed a job at a brokerage firm trading securities and analyzing online trading platforms. While getting my MBA at Boston University, I decided to shift into fixed income portfolio management.  This was a perfect career pivot for me.  Fixed income investing requires an appreciation of the macro world—economics, politics and government regulation—and the potential impact to markets which really played to my personal interests.  To this day, it’s allowed me to remain a news junkie while helping clients meet their fixed income needs.

3. Is there a piece of advice you’ve received that you still rely on?

Growing up in a hockey family, my dad used to always say to me, “Keep your head up in the corners.”   It means have your eyes open for anything—opposing players, the boards, the puck, a referee. He continued to say it after I graduated and launched my illustrious “beer league” career.  In hindsight, I think he wanted to make sure I kept asking myself “what am I not seeing here?” and “how much is it going to hurt?”.  It’s advice that also resonates in the investment world. As portfolio managers, we can create a thoughtful, well-constructed portfolio, but there’s always something that can surprise the market. Being on the look-out for the unexpected helps avoid costly mistakes. Remembering to always keep one eye open, and my head up, for those unforeseen risks allows me to be a better portfolio manager for our clients.

4. What is the hardest part of your current role?

Honestly, this yield environment has been very challenging. Fixed income has traditionally served two purposes within a client’s broader asset allocation—to reduce overall portfolio volatility and provide income.  These qualities still characterize the asset class, but capital preservation and reduced portfolio risk have lately moved into a leading role as generating income has become increasingly challenged. Sure, in the current environment, certain parts of the fixed income market may offer appealing yields at first glance.  However, we’re not comfortable grabbing yield wherever we can find it without keeping a close eye on risk. That can ultimately lower portfolio returns and create potential losses.  While we expect the environment to remain challenging, it’s critical to balance interest rate and credit risks with safety and liquidity concerns.

5. What has been the most rewarding part of joining Fiduciary Trust?

Before joining the firm, I’d spent most of my career focusing on fixed income markets at firms like Wellington, Hartford and MBIA. My roles centered on servicing the fixed income investment needs of institutional clients. The portfolio construction process exclusively targeted global bond markets. As a senior investment leader at Fiduciary Trust, I serve on the firm’s Asset Allocation Committee where I help form our policy views on multi-sector portfolio positioning. This has allowed me to develop views on other asset classes like foreign and domestic stocks as well as gain a wider understanding of what can impact client portfolios. I believe evaluating bond markets within that broader context provides a better perspective and, ultimately, has helped me make better decisions as a fixed income portfolio manager.


The information provided is intended solely to provide general information. The information and opinions stated may change without notice. The information and opinions do not represent a complete analysis of every material fact regarding any market, industry, sector or security. Statements of fact have been obtained from sources deemed reliable, but no representation is made as to their completeness or accuracy. The opinions expressed are not intended as individual investment, tax or estate planning advice or as a recommendation of any particular security, strategy, or investment product. Please consult your personal advisor to determine whether this information may be appropriate for you. This information is provided solely for insight into our general management philosophy and process. Historical performance does not guarantee future results and results may differ over future time periods.

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