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Three Successful Traits in Asset Management CEOs

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by Michael Maduell

In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful CEOs – meaning growing and retaining assets under management plus getting real respect in the industry – possess.

1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A handful of asset managers possess truly charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and has already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires may tend to look for greener pastures unless generously compensated.

Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of certain asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.

2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?

Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run, it’s better to be more objective when discussing potential strategies. Being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. I’m talking about a healthy dose of informative marketing. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.

3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its ultimate downfall stemming from early 2018.

Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.

The views in this article are expressed by Michael Maduell.
Michael Maduell is President of SWFI.
www.swfinstitute.org

Now GE Really Needs Sovereign Wealth Money

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General Electric (GE) used to be a giant, being involved in media and having a massive financial arm called GE Capital. The new GE is small and timid and could possibly use a strategic financial partner to become great again. Can GE find a sovereign wealth fund partner? Will Mubadala Investment Company come back to the table? Gone are the days of Jack Welch. The current GE strategy is to sell, sell, and sell, while doing the tango with US$ 115 billion in debts. In other words, the blind is following the blind, as a possible death spiral could be in GE’s future.

With a quarterly dividend at a paltry one cent, GE, the company that brings good things to life has slipped to its lowest level since 2009. GE indicated that cutting its dividend to US$ 0.01 per share will save the company US$ 3.9 billion per year. Meanwhile, third quarter revenue missed Wall Street’s expectations. Revenue came in at US$ 29.57 million, which was less than the US$ 29.92 million analysts anticipated. Earnings per share also fell US$ 0.06 short of expectations.

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McDonnell Investment Management to Integrate into Loomis Sayles

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McDonnell Investment Management, LLC is being integrated into Loomis Sayles & Company, L.P. by the early part of 2019. Both asset managers are affiliates of Natixis Investment Managers. The cost saving measure will enable McDonnell clients opportunities to Loomis Sayles’ resources and operational capabilities. McDonnell Investment Management manages US$ 11.7 billion in assets at September 30, 2018. The municipal business assets under management is about US$ 6.9 billion.

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Chuck Grassley Leaves Judiciary for Senate Finance Chair

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U.S. Senator Chuck Grassley, age 85, is leaving the Senate Judiciary Committee as chair. He will become Chairman of the Senate Finance Committee next year. The Iowa Republican has served as chairman of the Judiciary Committee since January 2015. Chuck Grassley served as Chair of the Senate Finance Committee in 2001 and from 2003 to 2007.

Grassley is replacing Senator Orrin Hatch (from Utah) who is retiring from the Senate. Replacing Orrin Hatch in Utah as Senator, is former Republican Presidential candidate Mitt Romney, who lost the 2012 election to Barack Obama.

“Looking ahead, at the Finance Committee, I want to continue to work to make sure that as many Americans as possible get to experience this good economy for themselves,” said Senator Grassley in a statement. “That means working to provide Americans with additional tax relief and tax fairness so they can spend more of their hard-earned money on what’s important to them.”

The Committee on Finance is one of the original committees established in the Senate and was first created on December 11, 1815. The committee deals with a whole matter of issues including taxation, revenue, customs, trade agreements, Social Security and more. It is considered to be one of the most powerful committees in Congress. In addition, the Committee on Finance has jurisdiction over both Medicare and Medicaid.

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