Currently senior portfolio manager for global fixed income strategies at Neuberger Berman, a degree in applied mathematics led him initially to a role at an investment consulting firm.
However, while reading up on derivatives the manager became so interested in the subject he decided to study both derivatives and finance. “I thought it would be a great combination given my strength in numbers. Derivatives were quite complex too at that point, they were a new thing in finance,” he recalls.
After researching the institutions offering courses in the topic he applied to the classic business schools such as Wharton, Columbia and New York University (NYU) and was accepted into the Stern Business School at NYU, a leader in derivatives research.
“I started studying finance and derivatives but that exposed me to a lot of other aspects of finance, all kinds of sort of modern theories of asset management. So I got really interested in ways to improve asset management and make things more efficient. All those good things they promise you in school that are much more difficult to implement in reality,” he laughs.
“The course was really interesting and I enjoyed it a lot, so that was my path to finance. Following that I interviewed with a number of firms, I looked at derivatives trading and asset management, and was offered a job at JPMorgan Asset Management (JPMAM) in 1998. So I’ve been studying asset management for the past 16 years.”
Having previously had no specific interest in either equities or fixed income, just general asset management, Mr Jonsson was offered the chance to get into the sector by joining the fixed income team, where he worked in more quantitative areas including developing tools for assisting traders and generating trade ideas.
Eventually in 2001, he moved into portfolio management and four years later he transferred to London with JPMAM.
“For all those initial years, I started in New York, I studied there and joined asset management there and then JPMAM asked if I was interested in relocating to London as they wanted to beef up their portfolio manager skills in the London office.
“I gladly took on that challenge. It was a good opportunity, my wife and I are Icelandic and our parents live in Iceland so London is a much closer place to Iceland. It was also attractive to again move a little bit out of my comfort zone, and I enjoy that. It was an opportunity to challenge myself in a broader opportunity set and broader markets with global aspects as well as moving to a new city. So that was all very exciting to me, an exciting challenge.”
After a further eight years based in London including taking control of the global aggregate strategies business at JPMAM, he joined Neuberger Berman in August 2013, where he immediately helped launch the Global Bond Absolute Return fund the following month.
“I have been managing fixed income assets for a very long time. But my view on the market now is that I feel very strongly that the current environment and the environment going forward will be very good for global absolute return bond funds. In managing global absolute return funds, having a strong process to assess relative value across all fixed income markets, is very critical,” he explains.
“Neuberger Berman had a very strong process in assessing relative value and it had the well established sector specialists across all the different opportunity sets within fixed income.
“So I thought it would be a great opportunity to join Neuberger and launch the absolute return bond fund with them, as they have all the components that I thought you need to be very successful at that.”
The Dublin-domiciled fund launched on September 25 2013 with the aim of generating an annual return of 4 per cent above cash over a medium-to-long-term investment horizon. Mr Jonsson notes: “It’s been exciting and we are off to a good start which always make things much easier.” Performance since launch to February 20 2014 is 1.7 per cent, according to FE data.
The fund is managed within the global fixed income team, which includes seven senior portfolio managers, two in London and five in the US. Mr Jonsson co-manages the fund alongside Andy Johnson in Chicago. However the company’s fixed income platform spreads across the globe, including offices in the Netherlands and Singapore in addition to the UK and US.
“There are a lot of resources, and that’s exactly what you need to manage this type of product. You have sector specialists and analysts that are doing security selection work so we have between 80-100 people generating best ideas on a daily basis that feeds into the fund.”
The global nature of the fund and the business means the manager does travel to other offices, but he notes: “I try to limit the travel to some extent, as you can’t really manage portfolios out of BlackBerrys or phone booths,” he laughs.
Although in spite of this he admits to always checking the BlackBerry for updates first thing in the morning and again in the evening as the US market closes, but he adds: “At weekends it is switched off. If markets are switched off, I’m switched off”.
Outside of the office the need to check in can be addictive, and therefore he favours more active breaks such as skiing, fishing or even golf, rather than the beach.
“Skiing is the best way to switch off. When you sit on the beach you always drift to work again,” he smiles.
Spending time back in Iceland is also another way to relax, spending regular holidays there that includes salmon fishing. Although the manager notes one of the more memorable fishing expeditions was not in Iceland but off the coast of Miami when he caught a shark while deep-sea fishing.
“You could see the shark come up on the surface, so you know it’s a big shark, and it took us two hours to get it in. It is not quite as sophisticated as salmon fishing, but it was a different experience, it was exciting. This year we caught a 14lb salmon, but compared to the shark which was over 300lbs, it’s nothing,” he laughs.
But while he enjoys the outdoors and escaping from the office every now and again, it is clear he enjoys his new job and the challenges it brings.
Looking ahead to what the future holds, Mr Jonsson notes: “I think, with the right process and right resources you can deliver consistent alpha and active management is possible. Within fixed income there is a debate about whether markets are efficient enough, I think there are always some forces that create dislocations in values. Certainly in the past we have had central banks create dislocations and overvaluations and undervaluations. So there are always dislocations to take advantage of.
“That is certainly part of the goal here. We are marrying a lot of good insight with strong process and hopefully that leads to the alpha. I think exactly this type of environment is good for absolute return funds, where central banks are very active in creating dislocation.”
He expects central banks to try to keep risk premiums low, but they will eventually have to tighten monetary policy, which could trigger asset deflation. “That is a very attractive environment for absolute return funds, so we are excited about that”.
CV
2013 – present
Managing director, senior portfolio manager, global fixed income strategies, Neuberger Berman
1998 – 2013
Head of global aggregate strategies and various other roles, JP Morgan Asset Management
1998
Graduated with a MA in Financial Engineering from the Leonard N. Stern School of Business, New York University
1994
Graduated with a BSc in Applied Mathematics, University of Iceland
