A Revolutionary Approach to Fixed Income Management
Sonal Desai, PH.D., is executive vice president and chief investment officer of Franklin Templeton Fixed Income. In this role, Dr. Desai oversees Franklin's Municipal, Corporate Credit, Floating Rate, Securitized, Multisector, Global (including Emerging Markets), Money Market, and Local Asset Management Fixed Income teams. She reports directly to the president and chief executive officer and is a member of Franklin Resources' Executive Committee, a small group of the company's top leaders responsible for shaping the firm's overall strategy. In addition, she serves on the firm's management and investment committees.
Dr. Desai is also a portfolio manager for a number of strategies, including Core Plus, Strategic Income, Total Return, Low Duration, Global Absolute Return, and Global Fixed Income.
I interviewed Dr. Desai on March 4.
You have an interesting background across academia, at the IMF and as an economist. How did that career path take you to your leadership role at Franklin Templeton?
Every stage of my career has taught me something extremely valuable for my current role. Academia taught me how to research and understand a variety of issues, how to apply analytics in a targeted and effective way, and how to communicate ideas clearly. At the IMF, where I worked on adjustment programs in many emerging market countries around the world, I learned the complexity of policymaking, which is crucial to understand how countries are likely to react in difficult circumstances. Then in investment banking, in a hedge fund and here at Franklin Templeton, I have gained exposure to most aspects of financial markets in a variety of market conditions, from irrationally exuberant ones to the global financial crisis. I have been enormously fortunate and privileged to be able to lead a very strong team and work closely with extremely talented colleagues.
Your management process integrates quantitative and fundamental disciplines. Tell me more about how that process has evolved and how it is implemented by your team.
Since being named CIO of Franklin Templeton Fixed Income, my focus has been on bringing every source of alpha to the table and ensuring those ideas are disseminated and integrated across the entire team. Competition is high and any advantage is fleeting in the investment management industry. What I have focused on is being able to move the platform forward, differentiate ourselves, and most importantly prepare the team for success in the next 20 years and beyond.
Evolving our process became more of an existential question – what do we need to do to succeed in the decades ahead? To understand our evolution, I think it’s also important to note our close proximity to Silicon Valley and the impact that’s had on our investment culture. Being headquartered in San Mateo, we are immersed in an innovation ecosystem. This has made it immediately clear to us how technology breakthroughs and data science are disrupting entire industries and that asset management will be no exception. In today’s world, if you aren’t continually evolving technologically, you risk becoming obsolete. Our CEO, Jenny Johnson, has been an early evangelist of this paradigm. Moreover, our location has given us great access to data science talent and the ability to collaborate with some of the most interesting startups in fintech.