Fund Managers Diary

I waste the best part of the day playing golf. With four shots out of the bunker on the twelfth, I go home a farcical 40 over. I read about the state of the American economy in The Times and Sunday Times to cheer myself up: [Anatole] Kaletsky and [Irwin] Stelzer are on form.

SundayI waste the best part of the day playing golf. With four shots out of the bunker on the twelfth, I go home a farcical 40 over.

I read about the state of the American economy in The Times and Sunday Times to cheer myself up: [Anatole] Kaletsky and [Irwin] Stelzer are on form.

MondayWith the summer in full swing – with regard to the seasonal lull in the markets, not the weather – I am given the opportunity to spend time on Bloomberg and catch up with newsflow, results and data releases. It is important not to lose sight of the bigger picture and its implications for the names we hold in our funds.

The figures out of the American banks are truly dire, but
that was to be expected and regulators are taking some necessary steps. It is Europe, where central banks are constrained by inflation mandates, that looks increasingly like the sick man. I am also on the lookout for any sign of weakness in the emerging markets. We sell out of Standard Chartered, which has weathered the storm well so far but is ultimately dependent on continued Asian growth.

TuesdayRepresentatives from Alliance & Leicester (A&L) come in to discuss their impending sale to Santander. While our position in A&L bonds has profited handsomely since the news first broke, there is still some further upside to stay on top of as spreads continue to converge to Santander/Abbey levels.

With the takeover looking like a done deal, we quickly move on to deliberating about the state of the British housing and mortgage markets. I come out feeling no less gloomy about the prospects for either.

Wednesday In the afternoon, one of my favourite sell-side analysts comes in for a chat about the financial sectors. Along with our own in-house financials analyst we discuss the pitfalls and merits of various contentious names from both sides of the Atlantic.

Credit markets are truly global and it is always useful to get the views of someone from the other side of the industry, as well as to hear the feedback they get from investors across the globe.

ThursdayIn the morning the entire credit team sits down for one of our regular update meetings. The analysts run through news and developments in their individual sectors and the fund managers in turn give a review of market conditions and portfolio positioning. The whole meeting serves as a springboard for investment ideas and many of our top stock picks arise from it.

I spend the afternoon listening to a conference call from
a Canadian engineering firm, half of it in French and all of it on a crackly trans-Atlantic line. Glamorous work.

FridayI spend most of the day looking for potential investments in various securitised bonds – yes, believe it or not, mortgage-backed securities. With the market spooked by the mere mention of the name, we have seen some real bargains available in this space. But for a reason; as I review the research with our two ABS (asset-backed securities) analysts we uncover yet more unanswered questions.

The level of disclosure and ease of garnering information
makes for tough-going. This is a sector not designed for the level of scrutiny required in a bear market.

SaturdayMy wife and I are expecting our first baby and we spend the day immersed in the world of bottles, changers, cots and baskets. And I thought credit markets were complicated. I choose the wi-fi video baby monitor, with night vision. My case for an upgrade of the family car is turned down.

  • Adam Mossakowski is a fund manager in F&C’s UK credit team. His diary runs from August 24-30.