October 31, 2005 12:00 AM
A new leader: Face to Face with Robert Beyer
Robert Beyer took the helm at The TCW Group and is charting a new course
On Oct. 1, Robert Beyer became the second chief executive officer in The TCW Group's 34-year history, taking the reins from founder Robert Day. Mr. Beyer, who has been with TCW for 10 years, assumed leadership of a firm that has increased assets under management to $118.9 billion as of Sept. 30, up 9% from the end of 2004. The growth has been driven largely by new accounts in TCW's large-cap relative value and dividend focused strategies. However, TCW, parent of Trust Co. of the West, must continue to evolve in the face of growing competition. The firm is refining areas such as institutional marketing to reach out to more clients. Mr. Beyer recently spoke with Pensions & Investments about his new role and where the Los Angeles-based firm is headed. What do you hope to accomplish as CEO? There are certain initiatives we have been working on that perhaps now, with a visible leadership change, we'll be able to expedite or complete. Those would be how we allocate firm resources among our distribution channels, (which include) institutional, wrap/managed accounts â¦ and now, as a result of our partnership with Societe Generale (the firm's majority owner), global distribution through the SocGen networks. Beyond that, developing client solutions rather than just having a menu of prepackaged products is critical in our industry today, and we have a number of initiatives directed at that. What are those initiatives? Taking our existing proven, long-term performers and combining them in a way that's attractive to clients is one of our significant initiatives. Everybody talks about separating alpha from beta. One of the good fortunes we have at TCW is multiple long-term, proven, alpha-generating capabilities in diversified, non-correlated assets classes. As clients start to look at assembling diversified sources of alpha, we have probably 20 products that have outperformed their relative benchmarks for 10 years or more. Because we're a diversified firm with a wide variety of fixed-income, equity and alternative strategies, we can deliver that diversified menu of alpha sources without having to create new products. How does TCW plan to increase assets under management? We need to figure out how we're going to allocate our distribution efforts. Some of our highest growth areas are in the retail channel through third-party distribution, and so we can take our most scalable products and focus on those areas without taxing the portfolio managers and without long lead times. So we clearly will do that. On the institutional side, we need to redevelop the way we approach and interact with our clients. The interaction has become a data-oriented, mechanical interaction based on RFPs, consultant databases and all the things necessary for clients to make manager selection. One of the things we have done recently is invest in plan analysis. We've been developing our portfolio analytics capability significantly over the past few years so our attribution analysis and the type of information we present to clients is very thoughtful and deep. What changes has TCW made in institutional marketing? Mark Gibello was our head of institutional marketing. What we decided to do â¦ was completely remake our institutional sales effort. What we used to call marketing, which involved communications, client service, sales and firm image, etc., really needed to be focused into a solutions-based sales effort. So we recruited a new head of institutional sales, Garret Walls. Garret is in the process of redefining how we're going to go to market to our institutional clients and is also very much a part of building a new separate client service function. He is now going to oversee our consultant effort. He also has taken the lead, along with Steve McDonald, who is responsible for building our portfolio analytics effort, in developing this plan analysis area and getting experts in to help us do plan analytics, as well as our own portfolio management analytics. Mark has really become more of a strategic thinker. He will still be involved in our cross-selling (efforts) in the rest of the world. That's something we've developed over the past few years, and there's great benefits to the institutional knowledge now that business has been developed and the relationships (have been) forged throughout the SocGen Asset Management organization. What is your outlook for mortgage-backed securities? Mortgage-backed securities are clearly a flagship product for us. Rather than focus on it in its limited form, we plan to continue our major effort using mortgage-backed securities as one of the significant asset classes in our core fixed-income strategy, which also has had excellent long-term results, and we believe presents a $50 billion growth opportunity for us, or more. What are the other growth areas? Our two fastest-growing areas of the firm on the equity side would be large-cap value, principally a product called large-cap relative value run by Diane Jaffee, who's been managing the product since inception and has first-quartile, long-term durable performance with tremendous alpha. For 10 years, she's nearly 500 basis points over benchmark. And we have grown that product from about $400 million four years ago to nearly $7 billion today. Second, and even more spectacular in terms of dollar volume growth, has been our credit mortgage-backed securities area. As opposed to mortgage-backed securities, these are little bit lower on the credit scale, albeit predominantly investment grade. We're involved in second mortgages, home equity lines of credit, manufactured housing, credit card receivables, all types of asset backs in that strategy. The strategy has grown from about $400 million four years ago to about $15 billion today. We expect that we'll be at $20 billion by the end of this year. We have added significant resources to that team to handle that growth. How is the concentrated core equity strategy faring now that Glen Bickerstaff no longer oversees day-to-day management? The team that is there, which still includes Glen, although he's not making portfolio decisions, is run by Steve Burlingame and Craig Blum, who are very able co-portfolio managers. The team, over the three years together managing this product, are 1,000 basis points over benchmark, so we don't get too hung up on an interim period where the markets have been tough. Have client terminations subsided? We lost about 11% of assets since the (September 2004) announcement (that Mr. Bickerstaff was leaving) and gained about $1 billion from existing clients. On a $27 billion product that is closed to new institutional accounts, we see these inflows as a very positive sign of support. Does TCW have a portable alpha strategy? We've been working on a number of fronts to transport the alpha we already generate into a deliverable form clients are interested in. For example, our non-U.S. sister companies under the SocGen Asset Management umbrella have a significant and top-quartile fund-of-funds business. In that business â which has several billion dollars under management with many U.S. managers, but mostly non-U.S. clients â we are finalizing a portable alpha fund of funds, and we will play a significant role both through our equity and fixed-income, and potentially alternatives, areas in that model. So there's an example where we don't have to develop the product, we just deliver the alpha.
- Current position: Chief executive officer, The TCW Group, Los Angeles
- Assets under management: $118.9 billion
- Fund performance:
Large-cap relative value Return Benchmark 1 year 19.44% 16.69% 3 year 24.00% 20.48% Mortgage-backed securities 1 year 19.44% 16.69% 3 year 24.00% 20.48% Benchmarks (respectively): Russell 1000 Value index; Lehman Brothers Mortgage-Backed Securities index
- Employees: 630
- Age: 45
- Marital status: married
- Children: four children
- Residence: Los Angeles
- Education: B.S. in Business Administration/Finance from the University of Southern California and MBA from the University of California, Los Angeles, Anderson School of Management
- Boards: Board member of Harvard-Westlake School; USC College of Letters, Arts and Sciences; UCLA Anderson School of Management; The Kroger Co.
- Hobbies/activities: playing sports and skiing with his wife and kids