Asset Manager of the Year Robert Gray on Finding ‘Highest Quality’ Bonds

Thanks especially to its off-benchmark exposure to high-yield bonds, Boston-based GW&K Investment Management’s Enhanced Core Bond Strategy performed “exceptionally well” last year, according to Envestnet | PMC.

Partner Robert Gray, head of national accounts, says the firm started out as an advisor to high-net-worth clients in the Boston area in the early 1970s; After growing its client base for the next 10-15 years, it moved into third-party business “when firms started to send their fixed income clients to us to manage.”

In terms of high-yield holdings, GW&K zooms in on those of “the highest quality …, so really you’re talking about single- and double-Bs,” according to Gray. “Most of our investments are in the separate-account format where the clients own the underlying securities. And we’ve had great success in just focusing on single- [and] double-Bs just below the investment-grade space, and we’ve been doing it for a long time.”

How does the firm feel about rising rates? “As a fixed-income shop, it may sound odd but we really go to bed every night hoping rates that will rise. The last thing we really want is to become Japan, where interest rates really collapsed. We believe in a rising-rate environment that allows us to be active and really do what we do well,” he explained.