Stephen Mackie is a Fixed Income Director in the FIIG Brisbane office. Stephen has over 26 years' experience in fixed income markets as a portfolio manager and trader. Prior to joining FIIG Securities, Stephen was a Director in the Global Multi-Asset team at QIC, specialising in servicing the investment requirements of industry super funds. Prior to this, he held a variety of senior roles as a trader and portfolio manager with RBC Capital Markets, Citi, Kapstream Capital and the Commonwealth Bank.
Stephen graduated with a Commerce degree from Griffith University before embarking on a 4-year stint travelling and working overseas. When not helping his clients navigate the fixed income markets Stephen is a big fan of spending time at the beach with his family, paddle surfing or behind the barbecue cooking up a weekend feast.
How did you get into fixed income?
When I finished University way back in 1991, Australia was in a fairly bad recession, unemployment had hit 11% and opportunities for graduates in finance, trading, in particular, were fairly limited. By the time I entered the markets in 1993, the world economy had recovered and markets in London were picking up fuelled by low interest rates and a boom in banking. I first worked at Credit Suisse and then later JP Morgan. Both banks had traditionally been big fixed income players, but the new game in town was trading derivatives.
When I moved to Sydney in 1995, I started with the Commonwealth Bank on the floor of the Sydney Futures Exchange, trading in the bond pits. Even though I was only there for just over a year, it gave you a real sense of how a market works and I think I learnt more about economics in the first few weeks yelling in the trading pit than I did all through my studies!
From the floor, CBA moved me up to the trading desk. I traded bonds, derivatives, foreign exchange and options at one stage or another. From CBA I spent some time at a start-up called Kapstream Capital that is now one of the largest and most successful credit funds in Australia. I then went to Citi to initially run their government bond book and then later the interest rate swaps desk. It was the GFC and to say the markets were crazy would be a massive understatement.
Before moving back to Brisbane in 2015 I spent 5 years in the UK, where I ran the Euro swaps desk at Royal Bank of Canada in London.
What do you do at FIIG?
I am lucky to have a varied role at FIIG covering the fixed income investment requirements of individuals, intermediaries and institutions. Fixed income in Australia has traditionally been reserved for institutional investors. For most Aussies, their investment portfolios typically consist of three asset classes: equities, property and cash. Bonds, more specifically corporate bonds, are a growing asset class in Australia. As banks start to become more risk-averse with their lending, the bond market will continue to grow and provide a valuable source of capital for Australian companies. You could say we are a bit of a bank disruptor.
As both a broker and arranger of corporate bonds, FIIG is at the forefront of the growth in the corporate bond market. Day to day I help make bonds accessible to everyone from private investors to the largest of fund managers. FIIG helps source liquidity by connecting all the different players in the market. With one phone call to FIIG, a bond investor is tapping into our network of over 100 counterparties both here in Australia and around the world.
What is the single most important lesson you have learned about fixed income investing and trading?
Diversification is key. It’s a cliché but one that applies no matter whether you are managing your self-managed super fund or you are a portfolio manager at a hedge fund in London. Spreading your risk across a number of asset classes and sectors is critical to successful outcomes. Bonds provide a way to diversify away from equity risk and help protect your capital in times of market stress.
What is your favourite part of your work?
Speaking to people. No matter who the client is, you really can’t beat the importance of getting on the phone to find out what they want to do. I am a bit of a dinosaur in that regard. With institutions, this also differentiates the bond market, unlike the share market. Bonds are traded over the counter, so instead of executing trades through a system into an exchange, most trades in Australia are done directly with either a trader at a bank or a portfolio manager at a fund. This also involves spending plenty of time on the phone or in chat rooms on Bloomberg, which is similar to a very old version of the internet for bond markets. Maintaining relationships and trust are critical to the functioning of any market.
Best pick at the moment?
Anything that is connected to infrastructure. We are in the late stage of the business cycle so companies that either construct or manage infrastructure should weather any future recession better than those connected to the consumer - Sydney Airport bonds as an investment-grade option or Plenary in the unrated space. Overseas in sub-investment grade, we have been active in Rockpoint Gas Canada which is owned by Brookfield Infrastructure Partners.
Do you have any hobbies?
I have been lucky in my career that we have been able to bring up our three daughters both in Australia and the UK. This has meant plenty of travel. As a family we are all pretty keen swimmers and skiers. Even after the rugby World Cup, I am still a Wallabies fan - I know we will get back there again one day!
Stephen is in the Brisbane office and can be contacted on (07) 3231 6646 or click here to view his profile
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