HONG KONG - Elizabeth X.Q. Tran has joined IDS Financial Services Inc., her third international money management job in less than 12 months.
The announcement by IDS follows her termination as chief investment officer of Pilgrim Baxter Asia, the Hong Kong-based international money management firm that was formed last April. The firm dissolved as of Sept. 1.
"We terminated Ms. Tran and dissolved the relationship over philosophical differences," said Harold Baxter, chief executive officer with Pilgrim Baxter, Wayne, Pa., the majority shareholder in Pilgrim Baxter Asia. The firm's second in command, Paul Warren, also was terminated.
"Without those two people we were not willing to go with the rest of the team," he said.
In an interview, Ms. Tran said it would be "difficult to be specific" about her differences with Pilgrim Baxter. However, in a letter to pension trustees, Ms. Tran stated, "We were disappointed with Pilgrim Baxter's decision to withdraw from the partnership."
Pilgrim Baxter "gave us some time to identify a new partner," she said in the letter, noting she knew in July of the coming dissolution.
In a subsequent interview in reply to Mr. Baxter's remarks, Ms. Tran said, Mr. Baxter "terminated everybody in the company because he was closing down the operation."
No figures were available as to how much money Pilgrim Baxter spent in starting Pilgrim Baxter Asia. However, Mr. Baxter said, "We are taking a hard look at our legal position in this." He declined to elaborate.
Ms. Tran said all of her staff at Pilgrim Baxter Asia is moving to IDS - 12 people including Mr. Warren and five portfolio managers.
Ms. Tran joined Pilgrim Baxter following her resignation last November from the once high-flying Prudential Asia Fund Management Ltd., a firm that also has been dissolved (Pensions & Investments, Feb. 21).
A Prudential spokesman said Ms. Tran resigned from PruAsia after she took responsibility as supervisor for "inadvertent" and "technical" errors in procedures. Those errors turned up after Prudential did an internal audit of the firm.
Although saying she resigned for personal reasons, Ms. Tran said in a telephone interview that she did resign "partly" as a result of another Prudential executive being given some of her supervisory administration authority at PruAsia.
The turmoil has not been without cost. At the end of the partnership with Pilgrim Baxter, Pilgrim Baxter Asia had only $50 million under management for two clients, a steep fall from the $1.4 billion at PruAsia.
Ms. Tran said it is "very possible" some pension funds will have concerns about her continuity at any one management firm.
She said the two clients she had at Pilgrim Baxter Asia have indicated they will move the money to IDS. She declined to identify the clients.
Peter Lamaison, president of IDS International, London, agreed there could be questions to answer to prospective IDS clients because of "things that have taken place in the last 12 months." But, he said, an informal check with current IDS clients found many of them agreeing IDS has scored a stroke of luck.
Some former clients said they saw the unraveling of PruAsia as a tragedy because under Ms. Tran's leadership, PruAsia had top investment numbers. PruAsia had a total return of 56.6% in 1993. In the fourth quarter of 1993, PruAsia scored 1,140 basis points over the Morgan Stanley Capital International Pacific Basin Index return of minus 6.1%. For the year, the total return for the index was 35.7%.
"I think she is extremely competent. I think IDS pulled a coup in getting her," said Simon Russin, a trustee for the Los Angeles County Employees' Retirement Association, which had terminated its account with PruAsia following the discovery of the accounting errors.
Ms. Tran said no quarterly numbers are available from Pilgrim Baxter Asia because she was there so short a time. She said from April 1 to July 31 of this year, the total return for Pilgrim Baxter Asia was 9.1%.
Despite the troubles at PruAsia and Pilgrim Baxter Asia, Mr. Lamaison depicts IDS as having scored a coup in getting Ms. Tran and her team.
"We would not have made this acquisition if we thought there any problems with these people," said he said.
Mr. Lamaison said IDS checked out Ms. Tran and her team in "more detail than I can divulge" and found they had "tremendous expertise."
He also emphasized he and other IDS people have experience in running a foreign investment office, hinting some of his competitors might lack that experience.
He added Ms. Tran and her team wouldn't be moving on in the months ahead because, he said, they are aware a third move would strain their credibility.
The Tran team is a "snug fit" for IDS because, he said, if IDS international had an "Achilles' heel" it was that it lacked a presence in the dynamic South East Asia, Far East and Pacific Basin, and specifically, Japanese markets.
Clients, he said, increasingly want regionalized investments, and it is hard for IDS to sell a "regional mandate" with no investment team members located in that region. Until the addition of Ms. Tran and her team, IDS International invested in the region from London.
Ms. Tran said she plans to stay at "IDS for a very long time. These series of mishaps are behind us, but it has been a pretty bad time."