Exclusive Q & A with Soami Kohly
Soami Kohl, Investment Officer, Fixed Income Portfolio Manager, MFS Investment Management
Soami Kohly, CFA, FSA, FCIA, is an investment officer and fixed income portfolio manager with MFS Investment Management® (MFS®). In his role, he is responsible for final buy and sell decisions, portfolio construction, risk assessment and cash management. He participates in the research process and strategy discussions. Soami joined MFS in 2009. Previously, he spent three years with RBC Capital Markets as an associate analyst in equity research and later as a vice president of structured products. He also spent twelve years as an actuarial consultant with Hewitt Associates. He began his career in the financial services industry in 1993.
As a speaker at the upcoming 2nd Annual Fixed Income Investments in Pensions Forum in Toronto, Soami Kohly answers crucial questions on key industry challenges offering some insights and preview into central topics he will discuss at the forum.
Q: The year 2017 started with rising rates from the Federal Reserve and a number of geopolitical events around the globe. What do you think these events may have impacts on fixed income portfolios for pension plans in Canada?
SOAMI KOHLY: Geopolitical events tend to create volatility in the short-run, however, over time by sticking to our process and convictions we believe we can add value. In our opinion, interest rates are likely to remain at current levels or possibly lower by the end of 2017 with credit spreads widening out relative to where they were at the beginning of the year.
Q: Low rates and longevity equate difficult math for heads of pension investments. What ideas would you offer for them to rethink about their fixed income portfolios?
SOAMI KOHLY: Diversify your fixed income portfolio as you would your equity portfolio. Pension plans can potentially increase returns without increasing risk dramatically by utilizing core plus investment strategies. Core plus strategies offer geographic diversification and a larger opportunity set across sectors. Additionally, for managers who can overcome the barriers to entry, structural inefficiencies in the BBB/BB market also offer an opportunity to generate alpha. Finally, do not underestimate the importance of liquidity and ensure all tools are used to drive alpha – credit, duration and FX.
Q: Fixed Income portfolios have been redefined in the past several years. Name something that’s generally considered part of fixed income portfolio that wasn’t quite 10 years ago.
SOAMI KOHLY: First, fixed Income portfolios are more global than they were 10 years ago. Historically, fixed income investors had a strong home country bias, however, this has been overcome through the need for global diversification, and higher returns offered by foreign securities. Additionally, BBB investment grade securities and Maple bonds are a larger portion of the index than they were 10 years ago and preferred shares are becoming a little more common as investors look for yield.
Q: Some say that fixed income portfolios are less exciting than other investment instruments. Please share one aspect that you find interesting that fixed income investments has to offer.
SOAMI KOHLY: Fixed income sometimes has a bad rap for being boring. However, combining fundamental bottom-up research on issuers and issues with top-down macro-economic analysis is as exciting as it gets! Equity folks don’t know what they’re missing.
Q: What are some of the insights you are looking to discuss with pension executives, at the upcoming Canadian Fixed Income Investments in Pensions Forum?
SOAMI KOHLY: The challenges and opportunities of corporate bonds in a compressed market.
Soami Kohly’s comments, opinions and analyses are for informational purposes only and should not be considered investment advice or a recommendation to invest in any security or to adopt any investment strategy. Comments, opinions and analyses are rendered as of the date given and may change without notice due to market conditions and other factors. This material is not intended as a complete analysis of every material fact regarding any market, industry, investment or strategy.
Issued in Canada by MFS Investment Management Canada Limited. No securities commission or similar regulatory authority in Canada has reviewed this communication.
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