After just 19 months in London at the helm of Hermes Pensions Management, one of the U.K.'s largest asset managers, chief executive Mark Anson, 47, is heading home. The Chicago native, renowned in the pension industry for his aggressive approach to alternative investments while running the California Public Employees’ Retirement System’s portfolio, is joining Chicago-based asset management firm Nuveen Investments in September as its president and executive director of investment services.
The move is as unexpected as it is sudden. At Hermes, which oversees $139 billion in assets for 240 pension funds, Anson was in the midst of orchestrating a major shift into alternatives for the firm’s largest client (and owner), BT Pension Scheme, the pension plan for British Telecommunications. That initiative, launched in the third quarter of 2006, was designed to reduce the plan’s equity exposure by 8 percent and boost its alternatives allocation to 15 percent of the portfolio, currently valued at $75 billion, from 7 percent.
So far, Anson has succeeded in bumping up that allocation to 10 percent, but fate intervened before he could fully implement his strategy. In May the CEO’s father fell ill suddenly, and Anson was unable to get back to the U.S. in time before he died. Anson’s father-in-law also became seriously ill recently. The executive says he wasn’t actively seeking to return to the U.S., but the strain of coping with two family crises from overseas took its toll. In early June, when Anson got a call from a headhunter asking if he’d be interested in moving to Chicago to join Nuveen, he was receptive.
“I already knew Nuveen well,” Anson says. “I’d talked to the team when I was still at CalPERS about whether there might be an opportunity for me there, but the timing wasn’t right -- I still had a lot I wanted to accomplish. But circumstances change. Even though my wife and I hadn’t planned to move back to the U.S. so quickly, this was clearly an attractive opportunity.”
Another catalyst in Anson’s decision was Nuveen’s announcement in June that the publicly traded company had agreed to a $6.3 billion buyout by private equity firm Madison Dearborn Partners. Management will take an equity stake as part of the deal, which is due to close this fall. “The goal is to get out of the scrutiny of the public eye and concentrate on building a high-alpha shop,” Anson explains.
Known for his skills in separating alpha, or returns generated by the fund manager’s skill, from beta, or market returns, Anson is looking forward to helping Nuveen develop a range of products from customized active beta funds with specific risk-return characteristics all the way up to actively managed alpha funds. “Nuveen is definitely picking up on part of this continuum -- they recognize it and are developing products along it,” Anson says. “My role will be to come in and help them build and grow that institutional business.”
Nuveen’s gain is a big loss for Hermes. The venerable British pension management firm took a risk in hiring Anson as its CEO. His shake-up in strategy was a radical departure for a firm with a genteel, civil service°©style culture, and three senior executives left after he took the helm in January 2006. The shock of his imminent departure has yet to be fully felt.
“We are obviously disappointed,” says Richard Bernays, chairman of Hermes. “Mark has done a terrific job during the time that he’s been here, and he’s made a great impression -- certainly on us, but I think also on the financial community in general.”
Until Hermes can conduct a new CEO search, Rupert Clarke, chief executive of the firm’s real estate invesment management group, will serve as acting chief executive. Bernays insists that Hermes will continue to pursue its portfolio diversification -- “the team is now in place, and Rupert is tackling this challenge with gusto,” he says -- but losing Anson, the architect of that strategy, is likely to slow Hermes’s momentum in the months ahead.
