Bond veteran Dan Fuss has defended President Trump from criticism of his early reign and said the 'difficult' environment isn't the US leader's fault.
The Loomis Sayles manager with 60 years of experience said credit risk in the corporate bond market is not being sufficiently rewarded due to more prominent political risks.
‘The political environment in the US is extremely difficult right now. The legislator is not getting enough done on contentious issues, which are often routine issues.
'On the major new introduction of legislation, the last time it was this bad in my memory was 1974,’ Citywire A-rated Fuss told sister site Citywire Selector.
Fuss is named on several funds including the $1 billion Loomis Sayles Multisector Income fund.
The US is polarized politically, he said, and this divide was magnified at a congressional level, which further added to difficulties in corporate bonds.
‘It is normal to read in the press that the president is the problem. I realize the president is inexperienced and has a somewhat difficult personality. He has managed to create problems with the things he controls, as well as alter how the world perceives the US. Donald Trump is not the problem, he was elected by a difficult highly flawed process and poorly managed campaigns.’
Trapped by circumstance
He said it was a good time to remain cautious, but now was not the time to drop out of the market.
'Spreads are narrow, but the current environment is very supportive. The Fed is not going to do anything crazy. The US central bank, the European central bank and the Japanese central bank are all trapped by the circumstances that they are dealing with,’ Fuss said.
'Their mandates are such that they will start bringing rates up. You are supposed to keep the banking system up, fight inflation and promote employment. Employment is not as good as it could be, but that is because of social problems and not because of monetary policy.'
Over three years to the end of August 2017 the Loomis Sayles Multi Sector Income fund returned 7.28% in US dollar terms. This compares to a rise of 15.15% by its Citywire-assigned benchmark, the BofA Merrill Lynch US High Yield Cash Pay TR USD, over the same time frame.