30 years of bond investment

Katie Martin (0:09)

So what happens to your brain if you spend nearly three decades in the bond markets? Is there life after bonds? Well, luckily, we've done a natural experiment to find out. Today on the show, we're doing things a little bit differently. We've invited in Jim Leaviss, a veteran no less of the bond markets in the UK and friend of the FT to tell us what he's learned in a 30-year career in bonds before he leaves M&G Investments to go into crypto. Not really, not really. Stay tuned. This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in London, and Jim is the chief investment officer for fixed income at M&G, overseeing 139 billion quid or so of assets.

Jim Leaviss (0:59)

Yeah, sounds about right.

Katie Martin (1:00)

It's more than I get paid in a year. Jim, welcome to the show. It's really nice to have you here. We don't have very many external people on, so consider yourself special.

Jim Leaviss (1:09)

Oh, thank you very much. It's been a delight working with you all over the past few years.

Katie Martin (1:13)

So look, you're not going into crypto at all. Let's get this out of the way first. What are you going into? What could possibly be more exciting than the bond market?

Jim Leaviss (1:21)

The only thing more exciting than the bond market is actually the history of art. So I'm up to the courtauld Institute, which is part of University College of London, and I'm going to do a masters in the modernist period, sort of Weimar Germany, hyperinflation period, degenerate art, a bit of Fritz Lang, all of that good stuff. So yeah, I'm going to write a thesis on something or other.

Katie Martin (1:46)

Are you going to start wearing a cravat?

Jim Leaviss (1:49)

What do you mean by start wearing a cravat?

Katie Martin (1:51)

Are you going to expand your cravat collection?

Jim Leaviss (1:53)

I am. I will have two by the end of this week.

Katie Martin (1:57)

So one of the reasons that we kind of wanted to get you in to do this is that you've done a lot over the years in trying to demystify bonds, right? You know, one of the things you've done at M&G is launch the Bond Vigilantes blog. It's got t-shirts associated with it. It's got baby grows associated with it. So you founded this thing in 2006 Why? Why do this?

Jim Leaviss (2:21)

Well, 2006 was a period where we had a great bond team at M&G, but there wasn't a lot of love for fixed income. It had fallen out of fashion a little bit. People had gone back into equities, and we always thought, actually, we've just got to keep out there talking about our asset class, explaining it. Also, we were quite nervous about some of the developments, particularly in the US. I'm not saying that we'd predicted exactly what was going to happen in the global financial crisis, but if you do go back and read the blog at that time, we thought there was a lot of interesting and concerning stuff going in, on in mortgages and in the US banking sector in particular. So we just wanted to do something interesting, and blogs were newish at the time. It was before Twitter and all of those good things. So we had a kind of early adopter benefit that got us a readership, and I think we wrote some interesting stuff.

Katie Martin (3:19)

Yeah. So going back to bonds, as you say, stocks are just kind of sexy, right?

Jim Leaviss (3:25)

Absolutely not.

I remember starting in the industry 30-odd years ago. There were all sorts of stories that stock investing was literally, we've got a list of companies we can't invest in because there's a fountain in the reception or the flag poles, or the CEO has got a beard or something like that. I always got the kind of, that's what the market was like in the UK back in the early 90s. I always thought that bonds, it's just a bit of everything. It's a bit of history, economics, politics, a bit of maths if you're interested in that. At the time, it just felt like equity investing was going to meet the management, and it's a good chap and a good story here. Whereas bonds seemed a lot more putting together everything, giving you excuse to read anything from the new scientist to some geography book and putting it all together and coming up with something really interesting. So I've always felt that not only is the bond market a lot bigger and more significant than equity markets, but I think they're a lot more interesting and really don't deserve, from the outside, some people think they're boring. Imagine that.