Introduction
Michael Zezas, a Managing Director in Research, joined the firm in 2007 as a credit analyst and portfolio manager, focusing on municipal and corporate bonds. In 2010, he became the Head of Municipal Credit Strategy, and in 2016, became Head of U.S. Public Policy Research. In these roles, Zezas leads analyst teams that advise clients on investment strategy around public policy issues and the municipal credit market. He is a CFA charterholder, has been a member of Institutional Investor’s All-America Fixed Income Research Team since 2013, and has been a Smith’s Research & Gradings Municipal All-Star since 2013.
Zezas holds a Bachelor’s degree in Political Economy and History from Georgetown University and a Master of Public Administration from the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.
How have your roles at Morgan Stanley progressed and evolved?
Before I joined Morgan Stanley, I was a public finance credit analyst at a ratings agency, which is a great training ground for a credit analyst. But after two years, I was looking for a faster-paced environment. When I arrived, I started in Wealth Management, where I was responsible for municipal- and corporate-credit portfolio strategy and helped build an analyst team. I had a real learning curve in transitioning to a global investment bank, but I welcomed the challenge and had great colleagues and mentors who helped me get acclimated and up to speed.
When I switched to Research, it was another opportunity to help put together a team, the Municipal Credit Strategy group, and to also develop a methodology for investing in the market. I now manage the research efforts concerning U.S. public policy, which are very collaborative, since we speak with so many disparate sectors on how public policy decisions affect the markets. It’s not uncommon for me to meet with members of the Wealth Management, Investment Banking, and Sales & Trading teams all in one day to discuss an issue on the U.S. legislative agenda that could affect various market prices. So my role has definitely broadened over time, in terms of visibility and footprint.
What do you like best about public policy research?
The subject matter is always evolving. In 2017, much of the focus was on tax reform, while in other years, topics such as education spending, the national debt, and healthcare reform grabbed the spotlight. What my team does with the research also varies day to day—writing it, communicating it, getting investor feedback, and testing our theories. It’s a very dynamic environment; for instance, the 2017 tax reform legislative process had a lot of twists and turns, which the markets reflected. We were getting data in real time, and in essence, drawing conclusions on a live experiment. That’s often the case when analyzing public policy initiatives.
What do you consider your most significant accomplishment and your biggest challenge at Morgan Stanley thus far?
Whenever my team produces a well-researched, accurate analysis of a public policy event, it’s always gratifying, especially when there are so many complex background variables. One example was our coverage on the Trump Administration’s trade policy reforms with China and Europe. Despite initial pushback on our analysis, we maintained our outlook that greater trade protections that would ultimately affect markets were on the horizon. Conversely, when our forecasts are inaccurate, admitting that we got the analysis wrong is humbling, but it's something that we make a point to respond to early and honestly. Case in point: In 2015, we produced a municipal bond market outlook report in which we advised against holding municipal bonds, since it was late in the credit cycle. Our analysis missed the mark and we had to speak with our clients about how we arrived at our conclusions, which for clients can be just as much a learning experience as an accurate forecast. That said, transparency is paramount. In that instance, our clients really appreciated our candor and earnestness in addressing our faulty conclusion.
Who have been some of your more significant firm mentors? What lessons from them have you incorporated when managing your team?
When I was presented with the opportunity to become the Head of U.S. Public Policy and Municipal Credit Strategy, Vishwanath Tirupattur, who is Head of U.S. Fixed Income Research, really encouraged me to take on the challenge. Through his mentorship and advocacy, he helped set me up for success when I assumed the role. Patrick Haskell, who is Head of Municipal Securities, has also been a great teacher and a major influence, not only with analyzing markets but also with career and leadership advice. They both taught me the importance of being aggressive when approaching a problem, often by taking a different perspective or using another school of thought. I’ve definitely tried to impart these lessons to my own team, and when I see them succeed, I feel I’ve passed along a baton from established Morgan Stanley leaders to the next generation of firm stewards.
What would you say to students who are interested in pursuing public policy research?
You might have personal preferences on policy outcomes, but it’s important to be concerned with "what will happen" and not "what should happen". It’s not easy to keep these perspectives separate, but it's integral to the role. Learn to abandon bias, particularly analytical bias. So being familiar and comfortable with different methods of quantitative research, such as statistics and valuation, are important complements to qualitative policy analysis that can help you develop more objectivity.
