Kenneth Leech isn’t as well known as star bond managers like Jeffrey Gundlach and Bill Gross. Based on his performance, maybe he should be.
Leech, chief investment officer of Western Asset Management, has twice been part of a team that won Morningstar’s fixed-income manager of the year award. This year, he and his colleagues are beating virtually all of their peers in the intermediate-term bond category thanks to savvy bets on interest rates, corporate debt and currencies.
“Ken doesn’t emit the great man vibe that some bond managers do,” Bill Miller, the legendary stock picker and a long-time colleague of Leech’s, said in a telephone interview. “He is more interested in generating returns than in generating publicity.”
The upshot: the $21.9 billion Western Asset Core Plus Bond Fund, Leech’s biggest, beat 98 percent of intermediate bond funds in 2017, and 98 percent over the past three years and five years, according to Morningstar. Along the way it outperformed intermediate-term competitors at Pacific Investment Management Co., TCW Group, BlackRock Inc. and Fidelity Investments.
The fund did well in 2017 because Leech and his team made several spot-on forecasts. They include correctly predicting that short-term interest rates would rise while long rates would move very little, that corporate bonds would make decent gains and that local currency debt in Mexico and Brazil was poised for a rebound.
“You’ve got better global growth and extremely subdued core inflation around the world,” Leech, 63, in a telephone interview from his Pasadena, California, office. That backdrop, he said, proved ideal for investing in everything from mortgages, to corporate bonds to emerging market debt.
Leech shares management duties on 61 funds with about $100 billion of Western’s $435 billion in assets. He joined Western in 1991 and rose to chief investment officer in 1998. In 2007 he was named to the Fixed-Income Analysts’ Hall of Fame.
Leech is a Life Master at bridge, whose strong suit is playing the hands, which requires identifying and weighing multiple possible outcomes and risks, much like investing, according to Dexter Senft, his bridge partner for 40 years.
“He knows how to play those cards like nobody I’ve ever seen,” Senft, a retired fixed-income manager, said in a phone interview.
Leech rarely appears on television or radio, by design, say colleagues.