INVESTOR PROFILE-Fuss steers flagship fund through choppy seas

* Served in the U.S. Navy as a signal officer

* Steering clear of U.S. T-bills on structural deficit fears

* Flagship Loomis Sayles Bond fund up 38 pct over last year

By Claire Milhench

LONDON, May 10 (BestGrowthStock) – Septuagenarian bond investor Dan
Fuss jokes that the best decision he ever made was choosing his
long-lived parents.

After 51 years in fixed income, Fuss shows no sign of
flagging and says he has asked human resources at U.S. fund
house Loomis Sayles to arrange his official retirement for the
first month after his funeral.

Fuss joined the Boston-based firm, now owned by France’s
Natixis (CNAT.PA: ), in 1976 and still heads its flagship Loomis
Sayles Bond fund (LP40006298: ), which has some $19.35 billion
under management.

The fund underperformed its peers in late 2008 and early
2009, but it was up 38 percent in the 12 months to the end of
April, according to Lipper data. It also beat its peers in the
Lipper Global USD Corporate Bonds sector by 20 percentage
points.

Fuss came to the bond markets after serving in the U.S. Navy
during the 1950s, where he said his mentor “Duke” Windsor taught
him the importance of being aware of everything around him.

“He said: ‘You have to know not only what this ship is
doing, but what the other ships are doing, and where the dickins
are those airplanes?'” he recalled.

A holistic approach to investment has been useful in the
last two years. With a secular rise in interest rates now on the
cards, Fuss is substituting specific risk for market risk.

“When the wind is in your face, you have to adapt — you
have to shelter yourself by having specific elements in the
portfolio that are positive, despite the general trend of
interest rates,” he said.

Fuss currently favours investment grade corporates, such as
Intel Corp (INTC.O: ), Wellpoint (WLP.N: ), and Comcast (CMCSA.O: ),
over sovereigns in an attempt to balance liquidity with yield
and at the end of March had nearly 25 percent in high yield
names.

But his biggest bet is in two-year Canadian government
bonds, which Fuss says is a tactical position.

Canadian interest rates are higher than those in the United
States and the credit direction is largely stable, but the main
bet is on the currency. This recently climbed to its highest
level in two years after the Bank of Canada indicated that an
interest rate rise might come as early as June.

Fuss likes Canada’s fiscal discipline, and as an example,
pointed to Canada’s funded pension system compared with the
pay-as-you-go retirement system in the U.S., where he is
steering clear of T-bills on supply fears.

TAPPING ASIAN GROWTH

Fuss is also finding ways of tapping the Asian growth story
without being held hostage to currency controls by seeking out
bonds from international entities borrowing in currencies like
the Singaporean dollar, Indonesian rupiah and Korean won.

He cited examples such as the Asian Development Bank
[ADB.UL], or a U.S. or European corporation borrowing money
locally, such as McDonald’s (MCD.N: ) in Singapore.

Born outside Milwaukee, Wisconsin, Fuss took a business
administration and naval service degree at Marquette University
in Milwaukee. At the time he made his decision, the Korean War
was raging.

“The Navy would pay for your tuition and books, and you got
a heavy uniform coat which was good for our cold winters,” Fuss
recalled. In return, he served three years and became a signal
officer on an aircraft carrier.

He left the Navy in 1958 and went to work for a small
suburban bank in Wisconsin, the Wauwatosa State Bank.

After various roles at banks and asset managers, Fuss joined
Loomis Sayles, where he has been ever since.

Throughout his long career, he says he has learned the
importance of changing his strategy to fit the times.

“When I started out in fixed income, interest rates went up
for 23 years with only short-term interruptions to that trend,”
he said. “Then they started to go down and that made life more
difficult.

“I had to get up earlier and earlier until I was getting up
at 4.23 a.m. With interest rates going up again, probably for a
long time, I look forward to sleeping in.”

Stock Investing

(Editing by Karen Foster)

INVESTOR PROFILE-Fuss steers flagship fund through choppy seas