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McGregor: People Are Overpaying for Income

Oakmark's Clyde McGregor thinks the flight to safety is overdone, and with spreads being compressed so greatly, it's hard to do anything but take on risk in fixed income.

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Shannon Zimmerman: For Morningstar, I am Shannon Zimmerman here today with Clyde McGregor of Oakmark Funds and in particular to Oakmark Funds, Oakmark Equity and Income and Oakmark Global. Global is a world-stock fund. We'll talk about that in just a bit, but I want to talk first about Oakmark Equity and Income which is a moderate-allocation fund in our way of categorizing funds. And I want to begin there because there were a couple of news items around that fund. One happened quite a bit earlier this year, and your long time comanager Ed Studzinski retired. So congratulations to him. My question to you is how has the day-to-day management of that fund changed as a result of Ed's departure?

Clyde McGregor: Oh, it's changed a very little. I have assembled two teams, one on the fixed-income side, one on the equities side from our analyst pool to guide me and advise me during this period, as well. So, I have lots of minds to bounce ideas off. Ed and I were more a unit doing that before and would bring in specific analyst oftentimes, but now I have teams that are doing that for me. But the way that the fund is managed has changed very little. There has been same kind of turnover rate that there has been before. The same equity, and the same allocation to value.

Shannon Zimmerman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.