Giant asset manager targets emerging markets.

TCW hires international investment manager

DOWNTOWN L.A. - Trust Company of the West has hired a new managing director for emerging international markets and promoted 14 other managing directors, calling the moves a response to growth in the company's national and international investment management activities, especially in international "emerging markets."

The downtown L.A.-based company on May 13 announced that it has hired Terence F. Mahony, a veteran international investment manager, as managing director responsible for investments in what TCW calls "emerging markets investment strategies."

Emerging markets are defined as places such as Latin America, China and other areas where economies are beginning to grow and companies from the United States and other developed countries are beginning to expand their operations.

TCW - one of the largest U.S. asset managers, with more than $53 billion under management for some 1,200 institutional and private clients - manages approximately $4.5 billion in international investments.

Marc I. Stern, president of TCW Group Inc., the parent company of Trust Company of the West, said emerging markets represent about $2 billion of that $4.5 billion. He said Mahony's responsibilities will include overseeing investment strategies relating to Latin America, Asia-Pacific markets (excluding Japan) and other global emerging markets.

The announcement of Mahony's hiring followed the announcements by TCW earlier in May regarding the promotions of 14 others at the company to managing director positions.

Stern said the promotions of the 14 managing directors did not indicate any restructuring or refocus at TCW.

The promotions were "just the normal progression you have in a company that is growing," said Stem. "We tend to do all of our promotions once a year, although there were probably a few more this year than normal."

Ripe potential

Stern said the hiring of Mahony, however, reflects TCW's increasing emphasis on emerging international markets, which TCW Chairman and CEO Robert Day identified last year as one of the most promising prospects for growth.

"This is an area that is growing quite rapidly, and we felt that we wanted to emphasize that area even more," Stern said. He noted that Mahony formerly was chief investment officer of global emerging markets at HSBC Asset Management, a unit of HSBC Holdings PLC, formerly known as Hong Kong Shanghai Banking Corp.

Stern added, however, that investing in emerging markets is just one of approximately 45 investment strategies that TCW has developed for its clients, which include 16 of the largest 20 corporate pension funds, five of the 10 largest public employee pension funds and four of the 10 largest union pension funds.

"I don't mean to overemphasize emerging markets, but this is one area where there is a lot of client interest," Stern said. "We think that part of the world has growth rates and potential for improved economics that are quite pronounced. But we wouldn't recommend that someone put all of their assets in emerging markets any more than we would recommend they put all of their assets in any other single investment."

One of TCW's strategies in pursing emerging markets is to develop residential and commercial real estate projects in overseas markets with a shortage of housing and office space for workers employed by U.S. firms expanding there.

Last year, for example, The TCW Group signed a deal with Houston-based Hines Interests L.P. and New York-based Dean Witter Realty Inc. to buy development sites as well as to build and operate housing and commercial buildings in those markets. TCW is providing the funding; Hines is selecting the development sites, as well as designing and constructing the projects; and Dean Witter is providing advisory and investment banking services.

Shortage of structures

According to Day, there is huge potential for U.S. investment in such markets. In a speech late last year, he said many of these markets have "hardly any living accommodations" and very little office space that would be up to the standards of U.S. workers and others from developed countries.

The push into emerging markets is one of the most recent growth strategies for TCW, which was founded in 1971 with $2 million of assets under management. The company has since grown into what it says is the third largest employee-owned investment management firm in the country, after New York-based Fidelity Research & Management and Los Angeles-based Capital Research Management Co.

TCW's growth has come partly through growth in its asset base and partly through acquisitions. Its most recent acquisitions were two other asset management firms purchased last year - New York-based Continental Asset Management Corp., which had $5 billion under management at the time of the purchase, and Los Angeles-based Crescent Capital Corp., which had $1.4 billion in total assets under management.

According to a fact sheet provided by the company, TCW has 50 portfolio managers, 60 researchers and 10 traders among its staff of 650. The company manages pools of tax-exempt investments for pension funds, insurance companies, foreign investors, high-net-worth individuals and other investors