Saturday - Sep 23, 2017

CEO John Koudounis Talks about Finance & the Economy of 2017

CEO John Koudounis Talks about Finance & Economy for 2017

President-elect Donald Trump’s claim in his victory speech, “We have a great economic plan – we will double our growth and have the strongest economy anywhere in the world,” has had a tremendous impact on investment professionals around the world, more so in the USA, where the consensus before the recent elections was that 2017 was going to be a continuation of 2016 with low returns, low yields, and high volatility, perhaps heightened to some extent.

In this interview, CEO John Koudounis of Calamos Investments, a diversified global investment company headquartered in the Chicago metropolitan area, talks about a variety of issues, including his view of opportunity in the global economy.

Mr. Koudounis has 28 years of financial services experience including executive leadership in the global securities business and a deep background in global capital markets. Prior to joining Calamos, he served as President and Chief Executive Officer of Mizuho Securities USA, Inc. (MSUSA), a subsidiary of Mizuho Financial Group, one of the world’s largest full-service financial institutions. During his tenure at Mizuho Securities he built the firm into a full-service investment bank, expanding its debt and equity capital markets teams. Under his leadership, the firm grew in profitability, the number of clients, and product diversification, allowing Mizuho to be considered globally as a top tier investment bank. Prior to joining MSUSA in 2008, he was Managing Director and Head of Fixed Income for ABN AMRO North America where he played a critical role in that firm’s successful growth.

First of all, Mr Koudounis, could you tell me a little about Calamos Investments and describe the company’s strategic objectives for the next couple of years?

Innovation, risk management and client service are the cornerstones of Calamos Investments. John P. Calamos, Sr. founded the firm in the difficult financial markets of the 1970s. He soon became a recognized pioneer in convertible securities, which are investments that combine attributes of stocks and fixed income securities. They provide the opportunity for participating in the upside of the stock market, but with potentially less downside. Throughout the decades, the firm has selectively expanded its client base, the markets it serves, and its suite of investment solutions. Today, the firm is a global asset manager serving clients around the world. In addition to our headquarters in metropolitan Chicago, we have offices in London, New York, San Francisco and Miami. I joined the firm earlier this year, to execute the next phase of the firm’s strategic vision. I’m looking forward to working alongside John Calamos, continuing the evolution of the iconic brand he has established. Our strategic growth objectives are global in focus, and we see many attractive areas for growth.

Is medium and long-term strategic planning really possible under current conditions?

Absolutely. I’ve long believed that if you have a clear vision, you can advance long-term strategic growth plans in any environment. Prior to joining Calamos, I was the CEO of Mizuho Securities USA. I joined the firm during 2008 and led the firm through some very difficult years for the financial services industry. Even though there were a lot of challenges and turmoil, I knew that there were still many opportunities. By following that vision, in just a few years, I had led Mizuho to become a top-tier global investment bank.

Who is your typical investor nowadays?

Calamos Investments serves a wide range of clients, including endowments, foundations, global institutions, high net worth families, and individual investors. We understand investors have many different needs, which is why we offer a range of investment solutions across asset classes—including alternatives, fixed income, convertible securities and equities.

What does Donald Trump’s Presidential victory mean for the economy? Do you see the future government developing incentives to encourage companies, both American and foreign to invest?

President-Elect Trump has campaigned on a pro-growth, pro-business platform, which I believe should provide support to U.S. economic growth. Although there’s still uncertainty around what his foreign policy will look like and the implications for foreign companies, he has been extremely clear on a number of points. For example, he’s been committed to individual and corporate tax reform, infrastructure spending and reducing regulation, which can support the U.S. stock market.

In your opinion, how will investors react to having to contend with a possibility of rising U.S. interest rates and inflation?

Our Investment Committee has had a lot of discussion around this. Right now, the markets seem to view an interest rate increase in December as all but assured. Even though investors have had a lot of time to prepare, many may still be surprised and caught off guard by rising rates. What’s important to remember is that it’s not a bad thing when the Federal Reserve raises rates in response to economic growth.

Are bonds still a good investment?

I see a great number of opportunities in the fixed income market for investment managers who are experienced and who take an active, selective approach. As our Co-CIO and Head of Fixed Income Strategies Matt Freund likes to say, it’s not a bond market, it’s a market of bonds. There’s likely to be a lot of variation in how different types of bonds perform when the Federal Reserve raises interest rates.

What is your view of exchange traded funds?

ETFs have become very popular over recent years but investors need to be careful. I believe in the benefits of active management, especially in periods where you have a lot of uncertainty in the global economy. Today, that uncertainty is taking many forms—we’ve got monetary and fiscal policy unknowns around the world, as well as a lot of geopolitical forces to contend with. Exchange traded funds can’t respond quickly to the changing risks and opportunities in the economy the way actively managed funds can.

Mr Koudounis, you have already had a very distinguished career. When you became CEO at Mizuho Securities USA, you were the youngest CEO on Wall Street. Given your experience, what do young entrepreneurs need in order to succeed?

I believe you should try to surround yourself with great people and encourage a team culture. On top of that, I believe that success is the by-product of vision and hard work. I attribute much of my success to the Greek values that my parents instilled in me. They always focused on trying your hardest, never giving up and always acting with integrity. Education was always a priority.

George Soros, a Hungarian/American business magnate, investor and political activist once said, “If investing is entertaining, if you’re having fun, you’re probably not making any money”. “Good investing is boring”. Do you agree with that?

I believe that successful investors are disciplined. There’s a good deal of hard work involved day in, and day out. A lot of people may view that as boring and not entertaining. What I would add is this: the investment management teams at Calamos are passionate about what they do—serving our clients.

Finally, what are your expectations and goals for 2017 for Calamos Investments?

I am excited about what the future holds for Calamos Investments. Our first goal has always been to serve our current clients and we are well positioned to do that. I’m also enthusiastic about our strategic growth initiatives, which continue to focus on diversifying and expanding business globally.

Mr Koudounis, thank you for sharing your time and opinions with us today.

For more information on Calamos Investments:

The opinions referenced are as December 8, 2016, and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice. The information in this report should not be considered a recommendation to purchase or sell any particular security. There is no guarantee an investment strategy will achieve its desired objective.

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