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Stewart Cowley on his rise and exit from the bond world


Music and fund management are rare bedfellows. For Stewart Cowley however, a classical guitar bought on a childhood holiday started his path to a career as one of the UK’s most-respected bond managers.

If people have a stock image of a fixed income fund manager in mind, the versatile Cowley puts every cliché to the sword. How many city biographies encompass an apprenticeship at British Steel, friendship with members of Chumbawamba and an appearance on Masterchef?

Music remains Cowley’s first love and continues to shape his thinking. He is the first interviewee for this column to base his answer on lyrics from a blues song: John Lee Hooker’s 1948 song Boogie Chillen’ includes the line ‘It’s in him, and it got to come out’ and Cowley believes a large part of successful fund management lies in nature.

“I don’t think you can teach everything it is to be a top-ranked manager,” he says. “You can teach technical details but the ability to see patterns and gut instinct have to be present.”

Cowley is part of a generation of managers who joined the industry in the 1980s from non-financial backgrounds. He believes this variety has diminished, with more of the recent intake taking financial or economic degrees and carrying preconceived ideas of how to do things.

Born in the north-east, his father worked at ICI while his mother had a job at the local wool factory. His introduction to music came in a Benidorm gift shop, although Cowley admits his father likely wanted the guitar for himself. He began to learn to play it at school – where his best friend was future Chumbawamba singer Dunstan Bruce – and believes music gave him a sense of discipline, focus and professionalism that has shaped his life ever since.

His parents were keen for him to get a job at 16 and he combined an apprenticeship at British Steel with college, before getting a scholarship to read metallurgy at Manchester University and continuing his studies at Oxford. Cowley met his wife there and, realising they would struggle to live on a university fellowship, asked a colleague about careers in finance.

He was told to become a trader and secured a position at Donaldson Lufkin & Jenrette, losing this soon after when the company cut its graduate programme following the Wall Street crash. Luck stepped in at this stage, with Cowley meeting his wife’s cousin, who worked at a small fund manager called Cheval Investments, at a party.

Fund management was beginning to take off and Cowley was soon running this side of the business by applying simple mathematical concepts to the firm’s mandates. Within a few months he was in charge of a billion dollars, starting what has become three decades in the world of fixed income.

Cowley says his scientific background was seen as a natural fit for bond investing: the engineers and scientists of his generation were broadly recruited into fixed income, while historians and geographers went into equities.

From talking to Cowley, it is clear he combines this scientific approach to bond markets with a desire to explain and educate and, ultimately, a duty of care to clients.

This has its roots in one of his earliest roles at Govett, where Cowley revived the fortunes of a troubled gilt fund. One day, he received a call from the son of an investor, concerned as his mother used the income to pay care home fees.

“This connected me to people and reinforced the fact that rather than fund management being a theoretical game we’re playing with the public’s money, there’s a real consequence for society,” he adds.

During spells at Govett, Paribas Asset Management, Ivory & Sime, Invesco and Hill Samuel in the 1990s, Cowley built a reputation for improving and building fixed income businesses. This culminated in nine years heading the bond desk at Newton from 2000 to 2009 and then six years at Old Mutual Global Investors.

While at Hill Samuel, massive changes in bond markets encouraged Cowley to start carrying out detailed modelling on currencies and interest rates, developing more formal processes and framing his approach with evidence.

He describes this as piercing a membrane of articulation and Cowley’s colourful notes and press articles became a fixture of his time at Newton and Old Mutual. At both he was eventually running billion pound-plus bond funds for the retail market.

His move to Old Mutual in 2009 coincided with economic chaos post credit crisis. While Cowley feels he did some of the best work of his career there, he found his responsibility towards end clients particularly onerous in this environment and decided to leave earlier this year.

“Part of my reasoning was that I believe that you have to be 100 per cent into this to do it properly. I felt like Alex Ferguson, wondering if I had it in me to stay another season,” he adds.

Cowley has set up a consultancy called Northfield Strategic Advisers (named after his school) and continues to write on a range of subjects. He has not dismissed a return to fund management and would be keen to run a macro portfolio at some point.

Apart from music, Cowley lists writing, snooker and cooking as his interests – with the latter leading to an appearance on Masterchef. Investors will hope this polymath does not allow these hobbies to distract him from running money for too long.


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