Money Masters, Part 3: Career Achievement, Daniel Fuss

Dan Fuss, the winner of the Invester Lifetime Achievement Award in this year’s Investment Management Awards, applies lessons learned in the Navy to risk and reward in fixed income.


Milwaukee-born Daniel Fuss, co–portfolio manager of the $19 billion Loomis Sayles Bond Fund, says there has been no bigger influence on his investing approach than his active-duty stint in the Navy from 1955 to 1958. Fuss, who is also vice chairman of Boston-based Loomis, Sayles & Co., started college at Marquette University in his hometown when he was just 17 and joined the Navy ROTC when the corps threw in a nice winter coat, a must for a Milwaukee winter. After graduation he became a signal officer on an aircraft carrier. Two pictures across from his desk in Loomis’s headquarters remind the 78-year-old investor of the Navy lessons every day. The first is a painting of aircraft carrier America launching planes that form in squadrons overhead. “That’s my definition of market risk; in other words, you look up there, and there are a lot of different things,” says Fuss. “But I always kept in mind that you had to make sure the carrier didn’t sink, in which case diversification wasn’t going to do you any good.”

The second painting is of the carrier’s forward flight deck, which for Fuss represents security-specific risks. “Just like the people on the forward flight deck, your job might be widget control No. 1, but there are 12 widgets, and you have to put them all together,” explains Fuss, a supreme storyteller who is half gentleman from another generation and half brilliant bond investor. “If any one doesn’t work, you get blown over the side, so that’s pretty strong incentive to stay on top of things.”

For Fuss, it’s the same in the bond world, as traders and portfolio managers have to understand everything from what’s happening daily in European high yield to emerging markets and daily inflows into such increasingly popular products as exchange-traded funds.

“You have to do your homework, and you have to pay attention,” he adds. “When you put it in very real terms, it doesn’t make you more risk-averse, it makes you aware of where you can get a bloody nose.”

Fuss has made a career out of determining where and when to take risks, and he’s built a well-drilled team to help him do it. The Loomis Sayles Bond Fund has generated a 10.31 percent annualized return since its inception in 1991. Fuss has beaten almost 90 percent of his rivals over ten years by buying issues that have fallen from favor. He sells when troubles calm down.

Before joining Loomis from Boston Co. in 1976, Fuss got an early education as assistant to Art Kohaske, president of Wauwatosa State Bank, located three blocks from where Fuss grew up. He credits Kohaske with knowing every single employee. Kohaske and Fuss would talk about the bank’s bond holdings every day.

Fuss has witnessed firsthand the development of the bond market, including the rise of secondary trading in corporate bonds in the late 1960s and ’70s, and the long stretch of rising interest rates and their subsequent fall. The financial crisis provided the ultimate lesson, perhaps: The Loomis fund dropped more than 22 percent in 2008 before roaring back the following year with an almost 37 percent return.

“I learned about liquidity and how quickly markets can seize up,” Fuss says.