For Fidelity Investments’ Ford O’Neal, one of the most important lessons of his life came from the field of lacrosse. The portfolio manager, who spent three decades at Fidelity and managed more than $155 billion in assets, played the game in high school and at Harvard. He said one of the most important skills he learned was teamwork, which played an important role in his reinvention of the firm’s fixed-income strategy more than 25 years ago. “[It] Obviously my love for team sports drives this. CNBC. We think a team-based approach is better because you can do challenges and reviews with 2, 3, 4 people on my team. He won the Morningstar Fixed Income Manager of the Year award in 2016. started his career in investment banking. So O’Neill went to Wharton Business School and got a summer internship at Fidelity. “[I] “I absolutely love what I do every day,” he said. “It’s a great job and I wouldn’t want to do any other job for the past 32 years.” Produces long-term outperformance The largest among the funds is the Fidelity Total Bond Fund (FTBFX), which has $35.8 billion in assets and a 30-day SEC yield of 5.32%. Morningstar gives the fund four stars and a gold rating from December 2004 to 2024. End of March. “Not only have Fidelity Total bonds beaten peers and benchmarks over many calendar years under O’Neill, they have also been less volatile as measured by standard deviation and have had smaller drawdowns.” O’Neill also has Fidelity Total in his quiver. Bond ETF (FBND), which has a 30-day SEC yield of 5.46% and an expense ratio of 0.36%, according to Morningstar. FBND 1Y mountain Fidelity Total Bond ETF Year-to-date These funds are considered Core+, meaning managers can add high-yield and other alternatives to a core selection of diversified, high-quality bonds. FTBFX currently holds 87% of its assets in investment grade bonds. O’Neill noted that Fidelity clients see fixed income not as a driver of performance but as a source of income and capital preservation relative to stocks, as well as diversification. “We are all looking at producing results that exceed the benchmark, but do so in a risk-controlled environment,” O’Neill said, adding that the team would not make large bets on interest rates or currencies. “It’s a bit old school — create alpha, manage risk, rinse, repeat,” he added. “If we do it well, we can be in the top half of the competitive field in a short period of time. But if we can do that consistently over many years, all of a sudden the fund starts to generate returns in the top quartile, [or] Over the course of five, ten, and now twenty years, the results are even better. Traders are consulted, and O’Neill emphasized that the fixed-income team also benefits from working with equity analysts when talking to corporate executives, public agencies and government issuers. A fairly well-known fixed income group. ,” he said. “That’s a huge advantage for us at Fidelity, access, but then having two very, very candid conversations with these people,” he said. Where does O’Neill see opportunities? Currently, O’Neill believes that as the Federal Reserve adjusts monetary policy and eventually cuts interest rates, the economy is most likely to see a soft landing. Because of this, U.S. Treasuries are the largest holding in a portfolio today, he said. He particularly likes Treasury notes with maturities of four to seven years. “When the Fed starts cutting rates, these are the ones that will benefit the most because as the curve inverts and potentially steepens, we think those rates are likely to fall faster than longer-term rates,” he said. O’Neill pointed out that although the 5-year Alpine 5-year Treasury bond yields are close to highs so far this year, credit spreads (especially investment grade credit spreads) are close to historical lows. “If you are a nominal yield buyer, you find the market very attractive. If you are a relative value buyer of credit, today’s market is very, very challenging,” he said. O’Neil and his team also retained a number of high-yield and leveraged loans they found attractive. “While these spreads are also narrower than a year ago, as long as you believe the U.S. economy will continue to move toward a soft landing, these yields are still well above investment-grade yields,” he said.
Top bond fund manager Ford O’Neill reveals his ‘secret’ to beating market
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