How did you end up in the investment management business?
JM: After graduating from my Ph.D. program, I tried to establish a startup in the field of cancer diagnostics, but it didn’t work out. A friend of mine who had done his Ph.D. with me in the same lab was working at Putnam (now part of Franklin Templeton) at the time, and he suggested I send my resume to the head of the Quantitative Fixed Income group. The leader was quite open-minded and was looking for people who had a certain skill set. He saw my resume, and I went through the interview process and behold—I was in finance.
What do you like most about your current job?
JM: I love poring through bonds, analyzing their cash flows, trying to determine the appropriate valuations and identify what the risks are. While you’re looking bond by bond, you must think about it from a macroeconomic perspective. Is this something that I want in my portfolio? I’m thinking about balancing the risks and returns, and how the bond may fit into our portfolio construction. I really do enjoy the analytical part of working in fixed income. There are also some very bright people in finance on the broker side. Interacting with them daily keeps you on your toes.
In many ways I feel finance is the lifeblood of the economy and there’s always something interesting happening, showing you something about the world. Even though you may or may not be in that sector or subsector, the way that each segment of the economy interacts with the financial world is very intriguing.
Are there certain industry trends you are particularly excited about?
JM: The industry trend I enjoy within fixed income is that it’s becoming quite quantitative.
I find that a lot of these machine learning techniques are topics I studied 20 years ago. Obviously, there’s been significant innovations in techniques, and methodologies are more advanced now, but it’s interesting to see these techniques now coming into fixed income. The other trend that I’m quite excited about is the wider adoption of the securitized sector, and the larger role it is playing in portfolios, whether it be in traditional asset management firms, insurance companies or institutional portfolios.
If you think broadly about the economy, there is the corporate balance sheet, the sovereign balance sheet, the central bank balance sheet, and then there is the consumer balance sheet. Only the securitized sector provides direct access to the consumer balance sheet, and that is why it can provide fundamental diversification to other asset classes. It helps that it typically tends to have wider spreads as well, mostly because it requires sophisticated quantitative analysis to tease out value.
Is there one piece of advice you’ve received during your career that you still rely upon today?
JM: I recall the best advice given to me was during the 2008 global financial crisis. I was quite junior at the time, and I had a seat on the trading desk. We were hearing phone calls saying that this firm is going out of business, or that strategy is blowing up. At a relatively junior level, I was getting a little rattled. The guy who sat next to me at the time was my former boss. He looked at me and said, “You’re hearing a lot of things, right?” And I said yes. He replied, “Well, don’t pay any attention to it. Just put your head down and work.” It turned out to be great advice. You realize some things are beyond your control, and there is nothing at all you can do about it. Stay focused on what you can control. 
You have a Ph.D. in chemical engineering from MIT. How much of this background is applicable to your current role?
JM: My Ph.D. is in a very quantitative field that relies on a lot of pattern recognition, classification and data analysis. The techniques that I learned and developed to interpret data were applied to biological data and, at the time I was doing my Ph.D., we were just at the cusp of a data explosion in biology where engineers had the tools and techniques to understand the data.
When I first joined Putnam, I was asked to develop a risk system for municipal bonds. I was working on an analytical tool that had already been built, which was designed to address the following questions: What are the risk factors? What drives the return? How do you model this? This was very familiar to me given my background in deep data analysis which I applied to a massive matrix of bonds, their prices, how they behaved in the market and how valuations change over time. I remember speaking with my boss and saying we need to discuss this group of “genes” because I’m seeing instances where they are not behaving like the others. My boss responds, “Genes? These are bonds, these are not genes.” Suffice to say, there is quite a bit of overlap in my skill set.
To what do you attribute your success in your career?
JM: I think I’ve worked hard, tried to be entrepreneurial, and thankfully, had some good mentors and teammates. I strive to treat people fairly and expect to be treated fairly in return, be it colleagues, business and trading partners, or clients. An example is how we interact with the street. I think we, as a group, have built a reputation for being very fair to trade with and being very sharp in terms of spotting value. Sometimes the brokers themselves come to us with attractive ideas which we can vet and see if they are beneficial to our portfolios.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal.
Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks.
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