Oct 20, 2022 · 35m · capital-allocators
Jack Sommers – Core Fixed Income at IR+M (Manager Meetings, EP.39)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Manager Meetings, NEPC Chief Investment Officer Tim McCusker interviews Income Research and Management (IR&M) co-founder Jack Sommers about the firm's growth from a $60 million startup to a $90 billion fixed income manager. Sommers discusses their disciplined bottom-up investment philosophy, intentional corporate culture, and enduring institutional client partnerships.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 10.2% of the talking time here. How this is scored →
Ted as informed peer 3.1 Guest teaching 1.3 Guest disagreement 0.0 Ted pushing back 0.1
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 28:07 Self-deprecating comment on client meeting utility
In a completely non-combative interview, Jack gently pokes fun at his own presence in client meetings, noting he rarely provides valuable technical information relative to his team.
Hardest push from Ted ▶ 29:11 Tension between customization and running a scalable businessTim directly challenges the operational viability of unlimited customization in the face of relentless institutional fee compression.
Biggest teaching moment ▶ 14:29 Explaining credit market discipline before 2008Jack details how avoiding pre-crisis toxic structures and hunting for structural inefficiencies like puttable bonds drove IR+M's post-GFC growth.
Ted holds their own ▶ 29:11 Probing fee pressure from consultants and OCIOsTim leverages his CIO perspective at NEPC to drill into the exact economic squeeze active fixed income managers face from consultants and mandate customization.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Jack Sommers' Background and Entry into Fixed Income | 3 | 1 | 0 | 0 | Tim opens with broad biographical questions about Jack's education and entry into the business. He connects Jack's father's founding story to NEPC founder Dick Charlton's timeline, showing mutual industry familiarity. | |
| Working Relationship and Mentorship with Jack's Father | 4 | 1 | 0 | 0 | Tim prompts Jack on IR+M's core investment discipline and product focus compared to competitors who expanded into niche credit products. The conversation is amicable and aligned. | |
| Firm Growth Trajectory and Organizational Scaling | 3 | 2 | 0 | 0 | Jack outlines the scaling of assets and personnel through the GFC, explaining how IR+M avoided subprime risk and exploited structural market inefficiencies like puttable bonds. | |
| Cultivating Firm Culture, Core Values, and Community Engagement | 3 | 1 | 0 | 0 | Tim asks about IR+M's strong internal culture, noting his own external observations of their gives back week, while Jack details their core slogans and community efforts. | |
| Hiring Rigor and Managing Cultural and Technical Alignment | 2 | 2 | 0 | 0 | Jack explains their structured hiring approach and admits their past tendency toward being overly nice when handling cultural misfits. | |
| Employee Ownership and Board Governance | 2 | 1 | 0 | 0 | Tim explores long-term client partnerships, prompting Jack to share anecdotes about multi-decade state pension clients and foundation due diligence. | |
| Balancing Customization, Fee Pressure, and Market Opportunities | 5 | 1 | 0 | 1 | Tim frames a sharp question on the tension between client customization, institutional fee pressure, and operational scalability, prompting Jack to break down IR+M's sweet spot. |
Statements from this episode (12)
Sommers: IR+M Generates Alpha Via Bottom-Up Bond Selection Without Macro Bets
“So we started the firm to basically be a bottom-up bond picker to help clients beat their fixed income benchmarks, and that hasn't changed. Part of what makes that work is not making big macro bets, and that really hasn't changed.”
Sommers: Strict Focus on High-Quality US Debt is IR+M's Differentiator
“We talk about our focus as a huge differentiator. We basically are a US dollar, fixed income, pretty high quality firm. And that's what we've been all along. So we haven't stretched it and don't want to risk what we've built.”
Sommers: The 2008 Financial Crisis Was IR+M's Greatest Business Opportunity
“Shockingly, the great financial crisis was like the greatest business opportunity for us ever. After that, our assets grew the fastest they ever had over any ten-year period, and we got up to about seventy billion dollars in 17 and 170 colleagues, and since th…”
Sommers: IR+M Avoided High-Risk Credit Ahead of the 2008 Crisis
“And then from a investing perspective, if you think back to 2006 and 2007 and what was going on, we basically said no to the quote, picking up pennies in front of the bulldozer. That, in hindsight, was obviously a very good decision. That was huge.”
Sommers: IR+M Paid 'Lip Service' to DEI Until George Floyd's Murder
“I think about DE and I, we talked about it. It was pretty close to lip service, and it really took the George Floyd incident for us to make a much more significant commitment to getting after it. And it's going to be a long game, and it's hard, but it's good. …”
Sommers: IR+M Cut Issuer Limits After Concentrated Portfolios Burned Them in 2002
“And then from an investment side, we definitely, in our early days, Ran very concentrated portfolios that I don't think fully took advantage of the ability to diversify away idiosyncratic risk, and we got burned in 2002, and we said we got to change this, so w…”
Sommers: Fire Cultural Misfits, but Coach Employees With Technical Gaps
“If they're a cultural misfit, I think that's clear that they need to go. If it's technical capabilities that we can teach or coach people out of, or maybe a small behavioral thing we can help coach somebody up on, and that person is committed to it, we will gi…”
Sommers: Why IR+M Rejects the 'Family Business' Label for Corporate Culture
“We try not to call our business a family business because you can't fire a family member and a family member can't really quit.”
Sommers: Asset Managers Must Reject Business to Protect Core Strategy Resources
“There are times when you just have to say no to some business because you want to make sure you have the resources that you need to find attractive bonds and getting them in the right portfolios in the right way.”
Sommers: The OCIO Trend Has Concentrated Asset Management Distribution
“The distribution part of the business has become much more concentrated. The OCIO trend, the growth in plan sizes, all that has led to larger asset amounts per relationship.”
Sommers: Market Pundits Display Arrogance Driven by Polarized Political Discourse
“I hate to bring politics into this, but the political conversation has become so polarized and hyped up, and sometimes I feel like our pundits are falling into that same trap where they just display this incredible arrogance.”