Fund Manager proFile John pattullo
The equity/bond divide
Henderson Global Investors’ bond expert John
Pattullo is jealous of equity investors, especially
the liquidity of their markets. But, as he explains
to Gary Corcoran, he makes up for it by using
equity-style analysis to help build his portfolio
“
The really
clever guys went into
corporate finance, the
clever guys went into
equities, and then the
thickies ended up on
the bond desk
pattullo’s bond funds vs indices – 3 years
%
pattullo’s bond funds vs indices – 1 year
%
15
12
9
6
3
0
10
-10
-15
5
0
-5
Henderson Strategic Bond Fund
-3
Henderson Preference & Bond Fund
Oct ’05 Apr ’06 Oct
Apr ’07 Oct
Apr ’08
Source: Morningstar
Fund facts
Henderson Preference & Bond I Acc
-20
Oct ’07 Dec Feb ’08 Apr
Jun
Aug
1 Oct ’07 – 1 Nov ’08. Source: Morningstar
Fund facts
Henderson Strategic Bond I Acc
Name: Henderson Preference & bond Fund Managers: John Pattullo
and Jenna barnard Launch date: 9 oct ’78 Fund size: £609.16m
No of holdings: 223 Initial charge: 4% AMC: 1.25%
Name: Henderson Strategic bond Fund Managers: John Pattullo
and Jenna barnard Launch date: 25 nov ’03 Fund size: £284.82m
No of holdings: 116 Initial charge: 4% AMC: 1.25%
LB Global UK
LB Global UK
”
20 PORTFOLIO ADVISER [www.portfolio-adviser.com] DEcEmbER 2008
Oct
Oct
by gary corcoran
John Pattullo is a frustrated
equity fund manager and is
“really jealous” of equity
markets.
In terms of his career in
asset management, he is
now and always has been
a fixed income fund manager
– but one who thinks
like an equity man: he
appointed a co-manager to
his bond funds, Jenna
Barnard, who has an equity
background; he takes it
upon himself to know a
great deal about individual
companies available to him
as an investor; and he studies
macros possibly more
than your average fixed
income fund manager.
“I am really jealous of
the liquidity in equity markets.
We spend a lot of
time looking at equity markets
only because to understand
bond risk you need
to understand what the
equity story is, company
strategy, what the management
is doing, and so on,”
he says. “Bonds are just the
poor cousin – if the business
is not working for the
shareholders there will be
a change of management,
strategy and balance sheet;
if it does not work for
bond holders, tough.”
l Roughed around
His cause is not helped by
the inconsistency in how
bondholders have been
treated in comparison with
equity owners of the troubled
banks in both the US
and the UK.
“On the Tuesday night
the Fed said it would not
support AIG; on Wednesday
night it bailed them out.
Originally the Bear Stearns
equity holders got stuffed,
although the bond holders
were OK because they
become part of JPMorgan.
In AIG’s case, the preference
shareholders were
killed, bond holders were
OK; in Washington Mutual’s
case everyone got stuffed.”
He adds that in the UK,
Bradford & Bingley was
treated very differently to
Northern Rock as the latter’s
bond holders were
effectively bailed out and
B&B’s were not.
“We were pretty scared
around that time as
it was not
inconceivable that they
could have wiped out the
bonds and nationalised the
banks,” he says. “Instead,
they put £5bn of preference
shares and £15bn of equities
into RBS.
“This is desperate and a
crisis and the rest, but it is
a great bond story and a
lousy equity story.”
l Typical path
Pattullo followed the classic
route into fund management,
with an economics
degree followed by
qualification as a chartered
accountant before joining
Henderson as a fund analyst
in 1997.
The difference between
him and others who followed
this route and then
fell into fund management
is that the latter was always
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