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Running a global portfolio

Working at London-based Merrill Lynch Investment Managers as the CIO of equities, Andreas Utermann occasionally daydreamed about starting his own business -- opening an investment boutique or setting up shop as a hedge fund. He left MLIM last May, but not to become an entrepreneur. Instead, Utermann, 37, snared a high-profile corporate job as global CIO for equities at Munich-based Allianz Dresdner Asset Management, which manages E1 trillion ($1.05 trillion) in assets. He now presides over a far-flung organization with 5,300 employees (800 of them investment professionals) in 20 offices from San Francisco to Seoul.

"At Merrill Lynch Investment Managers, I had built a considerable skill set running an investment team across a complex organization," Utermann says. "ADAM is an even greater challenge. If I ever wanted to set up my own firm, there is still time."

His mandate at ADAM is clear: Improve stock portfolio performance. Specifically, Utermann is pushing for 70 percent of ADAM's equity products to beat their benchmarks within three years. He won't reveal how ADAM currently ranks but concedes that he has set the bar high. "In Europe there are no large asset management companies that are even close to that. In the U.S. there is only one, which I won't name." (It's Capital Group Cos.)

Utermann wears two hats at ADAM. As global CIO for equities he keeps an eye on and gives needed resources to his local counterparts at ADAM's nine money managers, a group that includes Nicholas-Applegate Capital Management and Oppenheimer Capital. They enjoy considerable autonomy in setting investment strategy and supervising portfolio management. In addition, Utermann acts as CIO of one of the money managers, Dresdner RCM Global Investors.

The Belgian-born son of two European Community civil servants, Utermann grew up in Brussels. He received his undergraduate degree in economics from the London School of Economics and his master's degree from Catholic University of Leuven in Belgium. Intellectually, he easily crosses borders and disciplines; he's also fluent in four languages. "The cultural diversity of ADAM is something very few organizations could offer me," he says.

Utermann started his career in 1988 as a trainee at Deutsche Bank. Two years later he moved to Mercury Asset Management as an analyst. Merrill Lynch aquired the U.K. money manager in 1998; about three years later, Utermann became became global head and CIO of equities.

In his new job Utermann can draw on ADAM's strength in the European retail market. Out of 35 funds, 17 are double- or triple-A-rated by Standard & Poor's. This is far higher than the industry average of about one third.

The money manager's biggest problems are in the U.S. San Diego­based Nicholas-Applegate, which specializes in growth-stock investing, has delivered subpar performance. (In 2002 its U.S. Equity Growth fund fell 31.22 percent, compared with a 23.6 percent decline in the growth component of the S&P 500.) Not surprisingly, Nicholas-Applegate has lost clients of late, including Frank Russell Co. and the Sacramento County Employees' Retirement System. Overall, assets have fallen from $35 billion in 2000 to a recent $22 billion.

To help engineer a turnaround, last August ADAM hired a new CIO for Nicholas-Applegate: Horacio Valeiras, former head of core equity at Morgan Stanley Investment Management. Valeiras has in turn hired a former colleague, Stephen Sexauer, to run the value equity team. Sexauer managed Morgan Stanley's value equity fund for a decade, earning it a five-star rating from Morningstar.

As he surveys the world's stock markets, Utermann admits that he is a "natural worrier. Equities could spike 10 percent or 20 percent on positive news, such as a swift resolution of the Iraq situation. But structurally, as opposed to tactically, it is hard to find strong reasons why money should come flooding back into equities."