Subadvisor Spotlight: What Rock N’ Roll Can Teach Us About Investing

June 26, 2018 MD

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MD Financial Management’s global sub-advisors are hired for their investment philosophy, asset management expertise, investment research, innovation and, above all, their great people. In this series, you’ll meet a few of the faces behind our funds, pools and portfolios.

What do great investment teams and legendary rock bands have in common? It’s all about teamwork says Tom O’Gorman, Senior Vice-President and Director of Fixed Income Investments at Franklin Bissett Investment Management. A musician turned investment manager, O’Gorman has a unique brand of management that comes straight from his musical roots.

Teamwork orchestrates success

For him, great bands and excellent investment teams aren’t about stars – they’re built on the performance and the collective talents of the group as a whole. Sure, improvisation and talent are important, he says. “But if everyone is doing their own thing and the lead guitarist is trying to do some kind of Eddie Van Halen guitar solo, all you’ll hear is noise,” he says.

For his fixed income team at Franklin Bissett, sub-advisor for our MDPIM Canadian Bond Pool and MDPIM Canadian Long-Term Bond Pool, teamwork has been a critical success factor.

“We’re a team, not a star system,” O’Gorman stresses. “We manage every strategy as a team made up of specialists. We come together every day to leverage the best ideas we have in front of us, regardless if they come from our team in Calgary or the broader global fixed income team’s country and sector specialists.”

This mirrors Franklin Templeton’s signature approach – eschewing a top-down house view model, the company empowers its teams and leverages their ideas. “There is no single house view at Franklin Templeton because we have different fund management teams with various investment styles,” explains O’Gorman. Like a great band that works together, it’s very much a collaborative effort within each investment group. “We encourage the sharing of best ideas and for teams to leverage any pocket of expertise that can add value to their strategies, mandates, and portfolios,” he says.

The art and science of it all

To make it work, it takes a great manager of managers – O’Gorman attributes his management savvy to a mix of musical creativity and business know-how, something he’s been combining for years. While he started off studying at the prestigious Berklee College of Music in Boston, he moved to a college that would allow him to double major in both music and business. That unique combination of management, math, and musical talent sets him apart in many ways.

“The creative side allows you to look at things a little differently – especially managing people. I’ve been asked how I get my team to gel so well and it’s about working together – my musical background really helps.”

Bringing creativity to fixed income investing

Music is still in his soul: he spends time playing the guitar and piano with his two children, ages 4 and 7, or writing his own songs and has performed them live at Calgary’s Summer Solstice Festival and other local venues.

And in today’s fixed income environment creativity is needed, especially as economies around the world continue to feel the effects of post-2008 quantitative easing measures. Yields have dropped to zero and even negative – all this creates challenges as well as new opportunities. This is where core-plus type strategies come in. By providing flexibility to augment core domestic investments with allocations to assets that are less correlated with Canada, such as high yield bonds, bank loans, preferred securities, currencies and derivative strategies, core-plus portfolios can improve returns while maintaining or even lowering risk.  

Ultimately, says O’Gorman, it’s about finding the best ways to generate better risk-adjusted returns with risk being the key.  “It’s not just the returns,” he says. “It’s the risk you take to generate them. We are grounded by our risk framework – what do different risk exposures do to the overall risk of the portfolio?” Styles can go out of favour – but delivering consistently good risk-adjusted returns never does. “To me that’s the one thing with which we can be measured by and compared to our peers.”

Discipline pulls it together

What’s the top lesson O’Gorman has learned from both his musical and investment backgrounds?

“Discipline – it’s important because when volatility hits, if you get emotional you can lose perspective. You need to be able to step back from it and take the personal out of it.”

As bottom up managers, that discipline is always there – it pulls his team together and gives everyone a common focus. And that’s the key to a good team and a good band of musicians – says O’Gorman, “we are stronger as a team than our individual talents.”  

MD

Looking for a less formal take on market news and investment strategy? Read the MD Blog where we share our thoughts on events, trends and people shaping (or shaking) the markets and your investments. Each week, we aim to educate and entertain with the ultimate goal of empowering investors with insights to make informed investment decisions.

 

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