June 27, 2010. Americans are often stereotyped as insular and unable to see beyond the bounds of their country, but there are many exceptions.
One such is Mark Fetting, chief executive of Legg Mason, who has recently embarked on a demanding perpetual schedule of international travel as part of his determination to turn the US investment manager into a global investment manager.
“Now 35 per cent of our assets are held by non-US clients. My goal is to get that to 50:50 or even more,” he said on a recent visit to London. “I have commenced regular visits to our international cities – I plan to be here at least a couple of times a year.”
The UK is a high priority destination for Mr Fetting because “four of our top 20 shareholders are London-based”, but other world cities are not neglected on his tours.
At the moment he is not just meeting shareholders, clients and colleagues around the world, but also window-shopping for potential acquisition targets. “From an investing standpoint, one of the things we’ve talked about is getting more capability in international equity, and many of the best international equity investors are based in Europe, many located right here in London.”
Although the hunt has been on for a while, Mr Fetting dampened expectations of any immediate move. Legg Mason glanced at Pioneer, Unicredit’s asset management subsidiary which is currently on the market, but “I can’t see us being very interested”, says Mr Fetting.
When an asset manager is acquired, the Legg Mason way is to give its new subsidiary a high degree of autonomy, particularly in terms of investment strategy.
“We feel very strongly there’s a real advantage to having different cultures between different affiliates,” says Mr Fetting. “When you go to each firm, it’s their chemistry, it’s their culture you see when you walk in the door.”
The affiliates include Legg Mason Capital Management, home to the legendary Bill Miller; value investor Brandywine Global Investment Management; fixed income specialist Western Asset Management; and hedge funds of funds group Permal.
The tie that binds these together, apart from collaboration on marketing, distribution and services such as compliance and accounting, is “a sense of common values”. Mr Fetting has a list of the five values or beliefs common to all Legg Mason affiliates.
The first he describes as “a very strong sense of ‘no chalk’”. For non-sports enthusiasts, this refers to a belief that players should play far enough within the chalk lines of the pitch (representing the regulatory framework of investment managers) so they run no risk of getting chalk on their shoes.
Then, “increasingly, there is a focus on results”. Third, perhaps surprisingly given the declared importance of individual units, is collaboration, based on the need for the Legg Mason affiliates to work together with the Legg Mason distribution and marketing teams. The fourth key value is less obvious – “we view this as a profession, more than a business”, says Mr Fetting.
The implication is a commitment to continuous improvement, he explains, for the company’s investment professionals, but also for all its other skillsets, such as administration or legal.
“This is not just a job. It reinforces the fact that we’re running other people’s money.”
His final item on this list of Legg Mason characteristics is “empowerment, particularly around innovation”. With $660bn (£442bn, €537bn) under management and 3,600 employees, ensuring a spirit of entrepreneurialism is challenging, but important, he says.
Regarding asset management as a profession rather than a business requires a company to pay attention to what its clients, the owners of its assets, want.
In common with many others, Mr Fetting has identified one key trend, at least among institutional investors.
“Clients are less interested in us saying ‘these are the products’, and more in a dialogue about ‘what are our needs?’. They’re much more interested in customised solutions.”
With 60-70 per cent of assets under management coming from institutional clients, Legg Mason is having a lot of these conversations.
