Who has been the most successful funds manager, in terms of building a business, that Australia has produced? The late Robert Maple-Brown? Kerr Neilson? Chris Cuffe? Mike Crivelli? Perhaps John Wilson should be considered. Here are Wilson’s credentials after he announced last week that he was leaving PIMCO.
In 1997, having left the old Bankers Trust, where he was one of several business development managers, Wilson was representing the sleepy New York equities firm of Oppenheimer Capital, working from a small office in South Melbourne. It wasn’t an easy sell, even though the markets were beginning to heat up through the run on tech and telecom stocks. Then, Oppenheimer decided to merge with PIMCO, a similarly sleepy American bond manager, based at Newport Beach, California. Wilson took on the role of Australian rep for them too. But selling bonds in a rising equities market was not easy either.
The Oppenheimer business, which was assumed by PIMCO, didn’t last too long and Wilson found himself championing what was then almost an alternative asset class – global bonds. He puts a lot of the subsequent success down to “perseverance”.
“There wasn’t really much competition,” he said last week. “We had a total return approach to fixed interest and others seem to come and go offering similar strategies. We stayed the distance… I had a number of people who supported us, they believed in us, including Monte Tarbox at Frontier and Ray King.”
They were two of the leading asset consultants of the time. Tarbox was an American who was a senior consultant with the former Industry Fund Services (now Frontier) for a few years before heading home and King was also a former head of that consulting firm who subsequently went out on his own with Sovereign Investment Research (which has since been sold). JANA, too, was an early supporter.
The firm Wilson leaves behind after 16 years is now the largest fixed interest manager in the world. The Australian business has more than $A33 billion under management across a range of fixed interest strategies from hedge-fund like international funds to plain vanilla Australian and global sovereign bonds.
If he was having difficulties with his colleagues in Newport, Wilson was not going to let on, publicly at least. He said the firm often had healthy disagreements about business strategies. Nevertheless, the acting head of international institutional business and Wilson’s former boss in the Asia Pacific region, Doug Hodge, was dispatched to Sydney from Newport last week to make sure everything was okay. PIMCO executives were given “speaking notes” to assist them dealing with clients and press.
Wilson is also a former head of international business for PIMCO, based for a couple of years in Newport. However, he returned to Australia to resume running the local operation because that’s what his family wanted.
And he probably missed his sport. Wilson is a rugby tragic, an enthusiastic member of the Mosman Over-45s rugby team and devout follower of the sport. He intends, for instance, to follow the British Lions around Australia on their tour which starts next month. The Lions tour only once every 12 years. And he returned to university this year to do a Masters of Arts degree.
The two big decisions Wilson got right at PIMCO were to set up a domestic production capability and to enter the retail market. In hindsight it would seem that these were obvious decisions but they did not look that way 10 or more years ago. There were lots of Aussie bond managers and none of them seemed to make much money. Most couldn’t beat their index with any consistency. And plenty of successful institutional managers had failed to get traction in the costly retail market.
For the retail assault, in 2005, Wilson recruited his former BT colleague Peter Dorrian, initially as head of “re-marketing”, which is a peculiarly American term for someone who packages wholesale strategies and funds for the retail market. Dorrian now goes by the more commonly used title of head of retail distribution. PIMCO is dominant in both areas in Australia.
PIMCO’s speaking notes say that a range of internal and external candidates will be considered to head up Australia and an announcement can be expected in due course.