Equity-Like Return Potential in the Loan Market

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Advisor Perspectives
Published on
Updated on
Loan Market

Sponsored by Eaton Vance

Editor’s note:

Before Bob retired from VettaFi, he sat down for this interview with Morgan Stanley’s Jake Lemle. We were unable to publish the interview before his departure, but we’re excited to have the opportunity to share it with you now.

– Lara Crigger, editor-in-chief, VettaFi

Guessing the direction of interest rates is no easier than any other tactical or market timing decision. The yield on the benchmark 10-year Treasury note is just under 3.9%. That is about 100 basis points less than it was a few months ago. Fed policy is uncertain, inflation has not been fully controlled, and fiscal deficits loom as a long-term risk for yields to go higher.

Those factors argue in favor of an allocation to floating-rate notes.

Jake Lemle, CFA, is managing director, head of loan trading & capital markets, and a portfolio manager at Morgan Stanley Investment Management.

Jake is a managing director of Morgan Stanley Investment Management Fixed Income, head of loan trading and capital markets and portfolio manager on the floating-rate loan team. He is responsible for trading high-yield loans and bonds for the senior debt group as well as public funds, separate accounts, commingled institutional accounts and structured products. He also has responsibilities for buy and sell decisions, portfolio construction and risk management. He began his career in the investment management industry with Eaton Vance in 2007. Morgan Stanley acquired Eaton Vance in March 2021. Jake earned a B.S. from Georgetown University. He is on the board of directors of Artists for Humanity in South Boston and a member of the Acquisitions Circle of the Institute of Contemporary Art, Boston. He is a CFA charterholder.

I spoke with Jake on February 2. This is an abridged version of a podcast I did with Jake, which you can listen to here.

Tell me a little bit about your career path. Who is Eaton Vance? What is its relationship to Morgan Stanley and what do you do there?

Eaton Vance and Morgan Stanley have a new marriage. We were acquired by Morgan Stanley in 2021, and Eaton Vance is probably a familiar name to many of your readers. But for those who don’t know us, we’re a global asset manager headquartered in Boston. One of our key areas of expertise is in credit. We were a pioneer in managing high-yield loans and bonds with our flagship funds, sporting inception dates back in the late 1980s. Today, Eaton Vance has one of the largest and most respected leveraged-credit platforms. I am privileged to have spent my entire 17-year career here with the new partnership and ownership under Morgan Stanley. The opportunity set just got a whole lot bigger. Our franchise is a shining example of consistency and investment process over a very long time.

I’m a senior portfolio manager on a range of different strategies, and I run our trading and capital markets effort for the floating-rate-loan team. I grew up trading, which forged my skills in managing risk and asset positioning and in portfolio construction. Eaton Vance specializes in active fundamental credit management, and I’ve spent my career helping build and grow this capability as the market has evolved and matured into what’s now a $1.5 trillion asset class.

Read the full article here by Robert Huebscher, Advisor Perspectives

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