Andrew M. Carter — the father of active bond management who also created the first bond index fund and was considered “one of the finest math guys” in fixed income — built a clientele of some of the biggest corporate pension funds.
He worked at leading investment advisory companies as well as founding two of his own money management firms.
Mr. Carter, who was 74, died Oct. 17 at his home in Boston.
“Bill Gross had called him the father of active bond management,” said Renee Krimsier Carter, his wife, recalling William H. Gross introducing Mr. Carter at a conference. Mr. Gross adapted Mr. Carter's concept to his own fixed-income management style and went on to become a legendary investor, according to “The Money Flood,” a book by Michael J. Clowes, editor-at-large, Pensions & Investments.
Mr. Carter began his fixed-income money management career as assistant bond manager at the Harvard University treasurer's office from 1964 to 1968, managing the Harvard endowment's then-$500 million bond portfolio, according to “The Money Flood.”
He left Harvard in 1968 to join Thorndike Doran Paine & Lewis Inc., a unit of Wellington Management Co., a Boston-based money management firm, helping to create its fixed-income investment management.
When he left Thorndike/Wellington in 1972, he help found Standard & Poor's/Carter Doyle Inc., one of the first money management firms to specialize in active bond management, according to “The Money Flood.”
At the firm, he proposed the creation of one of the first bond indexes that resulted in the development of the Salomon Brothers High Grade Corporate Bond Total Rate of Return index.
In 1975, he left the S&P firm and joined Jennison Associates, New York, where he led the bond department and became senior vice president, according to his death notice.
At Jennison, Mr. Carter created the first bond index fund, said Ronald J. Ryan, founder and CEO of Ryan ALM Inc. It was for the New England Telephone & Telegraph Co. pension fund, said Mr. Ryan, who was then director of fixed-income research at Lehman Brothers. With Jennison a client of Lehman, Mr. Carter worked with Mr. Ryan. For the index fund, Mr. Carter used the Lehman Brothers Government/ Corporate Bond index, Mr. Ryan said.
“In bond land you are dealing with complicated math,” Mr. Ryan said. Mr. Carter “was one of the geniuses who understood bond math ... which is the key to fixed income,” he said.
“He was an innovator,” Mr. Ryan added.