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Julius Baer Global Income Fund
Interview with: Donald Quigley

Author: Dave Jennings
Last Update: , :
Morningstar recently upped its rating to five stars for the Julius Baer Global Income Fund. And for good reason. The multisector product managed by Donald Quigley ranked 12th among the 108 funds in the category for five-year performance. Average total return for the period as of June 15, 2003 was 7.31%.

Julius Baer Global Income Fund

A: The dollar really started to weaken in January 2001. Since that time, yes, we've caught a lot of that. But the track record in this fund has been good from beyond that. We're not just currency players, although it's undeniable we have done well with that.

Q: That is a good point about the long-term record. There have been only two losing years in the past 10. In addition, the fund has enjoyed more than one year of double-digit returns.

A: As I saIdent, we're driven by total return in the end. The income is important, but it is secondary.

Q: As an American investor, I am curious about how you can find opportunities offered by, of all places, the province of New South Wales?

A: I am not standing here by myself. Remember, I do have a team with me.

Q: How deep is the research?

A: We have in the fixed income team, ten professionals, some located in London, some in New York. We have an expertise in mortgage-backed securities, in credit analysis and interest rate and yield curve analysis.

Q: How do they obtain their research information?

A: It depends. Overall we're going to use a top down approach supplemented with a bottom up approach in security selection to find where we stand in the interest rate cycle. What part of the economic and interest rate cycle you're in, gives us a better sense of what investments are going to work best within fixed income.

Q: You have brought up the issue of interest rate cycles. Since we've been in a recession, we know what the Federal Reserve has done with regard to rates. But there are central banks all over the world that face interest rate cycles. The shareholder capital that has been entrusted to you can simply move around the world.

A: Exactly. We try and find the best opportunities throughout the globe and take advantage of those opportunities more so than our competitors. Some of our competitors stop at U.S. shores. When interest rates in the U.S. start going up - and that will happen eventually, they might not be going up; they might be heading down in, say, Australia or New Zealand.

Q: To be in a position of watching capital move around the world to places where it believes it will be treated well has to be exciting.

A: Certainly I am going to have advantages over the individual investor. I have a whole group sitting next to me that trades foreign exchange. We're pretty close to each other. I know several of them very well. If something is gong on, I can walk over there and ask where are the big flows heading? Or what are people running from? You can get a really good sense, at times, of a trend starting, as you saIdent, a place that has attracted capital or is all of a sudden becoming less attractive, for some reason. I can capitalize on that before the individual investor might read about it a couple days later in the paper.

Q: When it comes to global investing, politics is unavoidable. How does the firm incorporate its overall strategy?

A: We have a global economics group. Their projections would not be just in a vacuum. They would certainly encompass the local political changes that would affect global economies into their analysis. I'm always in touch with the head of that unit. He sits 30 feet away from me. I'm talking to him all the time. One of the great things about the Julius Baer Group is we're a big enough company to have the depth to do this, but we're small enough to be able to cut across corporate lines very easily.

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