Pioneer Investments has been named ‘Fixed Income Manager of the Year: Global’ by Global Investor magazine’s Investment Excellence Awards 2014, recognizing the strength and depth of its Fixed Income range across Europe, the U.S. and Emerging Markets.
This prestigious award is based on key achievements over the last 12 months and attributes that separate an asset manager from peers/competitors, with a particular focus on innovation, performance and ability to adapt to the market environment.
Pioneer Investments highlights the firm’s key strengths in US Fixed Income:
- Philosophy– A clearly articulated and consistent investment approach
- Organization– The nurturing of intellectual freedom in the organization
- People– Aligning the goals and aspirations of all investment professionals towards one common good – the pursuit of competitive investment results
Two common problems with Investment Management Organizations
The investment management industry appears to have evolved into two models: the boutique, which offers a small set of focused strategies, or the behemoth, which attempts to provide everything under the sun.
Sector Advocacy is an industry phenomenon that results when investment analysts stop viewing their sector in terms of its role in an overall strategy and start to endorse its role in all investment environments, no matter what.
Investment Myopia occurs when an investment analyst’s universe of subject coverage shrinks, his or her focus turns inward, and intellectual silos develop that impact the sharing of information within the context of the strategy.
A Better Way: Review, Rethink, Rebuild
To deal with the problems of sector advocacy, investment myopia and the consequences of unintended bets, Pioneer Investments started from a clean slate with the arrival of Ken Taubes, Head of Investment Management US, in 1998. Ken’s prior experience with a large asset manager led him to believe that most large asset managers, for many of the previously stated reasons, were poorly implementing the traditional multi-sector fixed income strategy. Thus, Pioneer Investments embarked upon a radical rewrite of the traditional script.
The Investment Organization is Formed Around Three Guiding Principles
- Establish a Unified Approach: To break the psychology of sector advocacy Pioneer Investments attemps to 1) align analyst and manager incentives to portfolio performance, not just individual contribution, and 2) provide multiple sector and asset class responsibility, so that analysts and portfolio managers do not need to advocate for a bond or sector in order to justify their existence to the organization.
- Optimize Organizational Scale: To promote communication between professionals in different areas and to facilitate the sharing of thoughts and ideas, the asset manager aims to keep the US side of the organization lean. As a result, they keep the entire investment team on one floor in their Boston office and encourage free-flowing communication through regular, all- staff investment meetings. This has the added benefit of allowing to assign more sectors and asset class responsibilities to analysts and portfolio managers, reducing their fear of being intellectually side-lined when a sector or asset class is out of favor.
- Promote “Outside-of-the-Box” Thinking: One of the consequences of sector advocacy can be intellectual rigidity. Pioneer Investments encourages analysts and portfolio managers to seek out ideas more broadly, across geographies, capital structures and sectors. For instance, new ideas for our US taxable portfolios may come from the US tax-exempt area or from the high yield area or the mortgage- and asset-backed analysts. A subtle yet powerful outcome of Pioneer Investments’ organizational thinking has been the extremely low staff turnover in the 13-plus years that Ken Taubes has headed the US Fixed Income team. The reason is simple: most investment professionals enjoy working in an organization that provides a wide degree of intellectual freedom and promotes teamwork versus intellectual monopolization and cut-throat competition.