Q&A: Fund Manager Mark Kiesel, PIMCO

As Executive Vice President and a senior member of PIMCO's investment strategy and portfolio management group, Mark Kiesel is responsible for managing the firm's corporate bond portfolio. He also heads the investment-grade corporate desk. Previously, he served as PIMCO's head of equity derivatives and as a senior credit analyst. Although we interviewed him before the market's current storm, he offers solid observations about the financial industry and managing your career.

Could you describe your role?

PIMCO rewards people who put in the effort, and it's a fast-paced environment. I was promoted to a generalist role in 2001 and today I oversee approximately $150 billion of corporate bonds the firm is invested in. I work with our credit team to help clients capitalize on opportunities in the corporate bond market while avoiding risks. Many of our clients hire us for fixed-income bonds. On a daily basis, I oversee the firm's overall corporate exposure and manage dedicated generalist and corporate bond portfolios, which include mutual funds, hedge funds and separate managed accounts for both global and U.S. portfolios.

My corporate bond responsibilities require me to be a specialist. Our team must know details about companies and provide insights on where we want to be in a company's capital structure, whether it's the senior debt, CDS, CDX or cash markets. Also, we seek to determine which industries we should invested in. Every investment decision is really a buy/sell decision, as by not owning something you are underweighting it.

My job requires me to manage resources. I work with a team of 30 credit analysts, who are responsible for identifying bottom-up opportunities and risks. While I focus more on big picture concepts, our team of analysts specializes on security selection within an industry. By focusing on top-down issues, I try to help give analysts a roadmap of where we are headed from a macro-economic and risk perspective.

What's a typical day like for you?

I begin by checking e-mail and the markets by 3:30 a.m. Being on the West Coast, we start trading at 4:30 a.m. I check the markets from my Bloomberg, look at oversees activity and check in with colleagues in London and Munich. I usually read The Wall Street Journal and Financial Times online.

By the time I get to the office at 4:30 or 5, I've developed a snapshot about markets and have a game plan in place. I'll work with the trading desk in Newport Beach on determining which bonds to buy, and coordinate with Tokyo, London and Munich on buying Japanese, UK and European bonds. Over the course of a day, I am on the phone quite a bit. It's a juggling act. I spend time in internal meetings with portfolio managers and credit analysts to figure out our strategy. I'll spend time trading - buying and selling bonds. I will also look at the economic picture and try to understand the macroeconomic environment and growth areas, inflation, fiscal policy.

To be a portfolio manager, you must understand the big picture and where markets are going. I spend a lot of time visiting with clients in our office, via conference calls to discuss the firm's macroeconomic strategy, where opportunities exist in the bond market and what we think is happening with the Fed and bond markets. Some clients like to discuss things in greater detail, such as which bonds we like, and which industries and companies we favor.

What skills are required in order to be a portfolio or fund manager?

You need to be a risk taker, economist, trader and have resilience during tough times. Sometimes things don't go well. Sometimes you make the wrong investment. You must have the perseverance to ride out markets that aren't going in your direction.

At PIMCO, we have underperformed in quarters, and no one is happy with that. We want to deliver for clients and it can be difficult to always do that. So you must be able to get through those periods and ask the right questions: What am I missing? Is there new information available? Is my initial thesis behind my investment changing, and if so, what should I change? You need to be able to evaluate your position and figure out if you were wrong, or if maybe it will work out.

It's also critical that you have a passion for research and macroeconomics: where inflation is headed, for example. We look at hundreds of economic statistics and data in our global macroeconomic research. Also, you need to be an investor, and not just an economist. You must understand economics and turn it into profitable trades and investments for clients. There are good economists and good strategists, but a good investor like Bill Gross can see the big picture and see what is important. They can look at valuations and select the most attractive securities.

You must have solid communications skills. We interact with clients on a daily basis, and they entrust us with doing the right things for them. Most important, you should have a fire inside you. I feel this is what I was put on the planet to do.