Bond Managers Who Don’t Fear Rising Rates

After 14 years of working together, sitting side by side, Jenna Barnard and John Pattullo finish each other’s sentences, laugh at wonky jokes, and know how to walk the line between unwavering respect and spirited debate.

The co-managers of the $417 million Janus Henderson Strategic Income fund (ticker: HFAAX) have shared periods of stress—they took over the portfolio at the end of 2008, after it had lost 39% of its value—and milestones of success. The fund ended 2009 up more than 50% and has returned an average of 5.4% a year over the past five years, better than 98% of its Morningstar world-bond-category peers.

Along the way, they have learned the value of questioning conventional wisdom— and each other. “It’s when we fully agree with each other that we tend to make mistakes,” says Barnard, 37. After the financial crisis, like many bond managers, they assumed interest rates could only go up after decades of decline. They positioned the fund on the short side of the yield curve, and paid the price with middling returns in 2010 and virtually no appreciation in 2011. It was “the biggest mistake of our career,” says Barnard, and a “seminal moment” for the duo, who oversee $5.5 billion in assets for Henderson Group, which merged with Janus Capital Group in late May.