Pitcairn Update, April 2014
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Sitting in a Wigmore Association meeting, Chief Investment Officer Rick Pitcairn is never surprised to have his convictions challenged. Neither are the other six chief investment officers who make up this unique global organization. In fact, a robust exchange of ideas and the ability to have one’s opinions tested are among the most valuable benefits of membership in the Wigmore Association.
Pitcairn is a founding member of Wigmore, which formally came together in 2011. This group of family offices from around the globe meets regularly to talk about their philosophies, investment strategies, and ways to better serve their clients. Click here to read How the Wigmore Association Came to Be.
Great Minds Think Better Together
The firms who make up Wigmore are a diverse group. They serve similar audiences – generally families of wealth – and are equally committed to helping those families achieve their financial and life goals. But, as you may have heard Rick say, there are many roads to the top of Mt. Fuji. “Pitcairn and our fellow Wigmore members have our own individual methods and philosophies.” Pitcairn clients are very familiar with our approach, which is quite strategic and focused on equities as the foundation for growth. While some Wigmore members are similarly strategic, others employ big tactical moves. Likewise, some are more reliant on equities and others less equity-oriented.
This mix of styles makes for dynamic and informative discussions at Wigmore meetings. “We often have strong opinions and we’re not shy about sharing our thoughts or commenting on other people’s viewpoints,” says Rick. The uncertain investment markets of the past few years sparked particularly lively debates among the group’s members.
“Given Pitcairn’s strategic equity focus, our philosophy has been somewhat out of sync with the market’s bearish mindset in recent years. Pitcairn’s allegiance to equities and fairly optimistic view of global equities earned me a nickname from my Wigmore friends,” says Rick. “They called me the Complacent Bull.” Rick jokes about the friendly ribbing between members of the Wigmore Association, but he’s very serious about the value Pitcairn’s participation brings to the families we serve.
“The market’s prolonged, fear-filled sentiment certainly compelled us to question our thinking on equities. However, the discourse among Wigmore members helped us stay comfortable with our positioning and our conviction that global equity markets had a good chance to outperform,” recounts Rick. As a result, Pitcairn families generally remained invested in global equities throughout the past five years. Though markets faced many ups and downs, global equities were by far the best performing asset class during this period.
“I truly believe that exchanging ideas, challenging others’ opinions and defending your own convictions in an open dialogue with other knowledgeable, experienced professionals will lead to sounder conclusions.” According to Rick, that’s one of the main ways the Wigmore Association benefits Pitcairn families.
Tapping into Deeper Local Knowledge
Boots-on-the-ground trips to other countries – complete with inside insight from trusted local professionals – are another advantage of membership in the Wigmore Association. Over the past several years, each Wigmore member has hosted a meeting in the firm’s home country.
“There’s a definite advantage in personally seeing a country’s situation and getting the perspective of people who know the country well. For example, when we visited Australia with the Myer Family Company who is based there, we sensed things you won’t learn from documents. We witnessed firsthand the Australian economy’s bifurcation. All sectors related to raw materials were going great guns, fueled by demand from China and the Far East. But there was a whole other part of the Australian economy where the housing market was overleveraged and consumer credit was too high, fine points that are hard to see from the outside. The trip showed us the Australian market was at its peak,” says Rick, “and cooled our opinion of currencies linked to commodities and other real assets.”
Similarly, before the Wigmore Association visited Brazil together, the country’s infrastructure challenges were commonly known. “But reading numbers on paper just isn’t the same as seeing 52 ships lined up in the harbor waiting for a berth or hearing from the locals that Brazil now has fewer miles of train track than it did in 1930.”
Other Wigmore members concur with Rick on the value of local insight. Nelson Abrahão of Turim Family Office and Investment Management in Brazil points to insight he gained from Wigmore’s US members shortly after his firm joined the group. “In the beginning of 2013, there were critical political issues in the US, such as the Fiscal Cliff, debt ceiling, and Presidential election. It was very useful to us to hear the thoughts of our American colleagues.”
Product Introductions from Trusted Colleagues
Wigmore meetings have also introduced products to Pitcairn’s platform. The global marketplace includes a vast array of investment vehicles, new and old. It’s nearly impossible for any firm to know about all the latest opportunities. When Wigmore members gather, they often talk formally and informally about investment strategies and products that may benefit clients.
“At our meeting in Canada,” explains Rick, “we heard a great deal about investing in infrastructure projects, how important these trades are in Canada and Australia and how private/public partnerships are commonly used to tap this opportunity. That piqued our interest and we did follow-up research. Within eight months, we had Lazard Global Infrastructure on the Pitcairn platform. Infrastructure investments are a little less volatile than equities and allow us to add diversity to a portfolio. This opportunity came to our attention much more quickly thanks to our Wigmore membership.”
A Broader Reach
In just the few short years that Pitcairn has been a member of the Wigmore Association, the benefits to our clients have been quite notable – enhanced decision-making, more extensive research, sharper insights, and exposure to a broader range of opportunities. Now it’s time to look forward. Recently, as Wigmore members met in Montana, they reflected on how far the group has come and began charting a future course.
One of the most exciting developments is that Wigmore is now geographically unleashed. The group has completed visits to each member’s home country and can now schedule future meetings wherever the action is. “We’re looking forward to our next meeting in Singapore,” says Rick, “because Asia is definitely one of the few global hotspots Wigmore has not visited together.”
Currently in the middle of a two-year term as Wigmore Chairman, Rick believes Wigmore is an enriching entity and that its member firms will continue to grow independently. He’s also enthusiastic about how the group is evolving. It is open to new members, specifically in regions that are not yet represented, such as Asia and Central America.
“Beyond expanding, we are also focused on strengthening the relationships between our current members,” explains Rick. “We’re looking at greater collaboration between our investment teams and the possibility of opening dialogues between other areas of our firms, such as marketing or operations.”
There may also be opportunities to use the Wigmore’s combined influence and buying power to enhance individual firm resources. As Rick says, “We may be able to achieve more together than we could separately.”
Pitcairn has made an investment in the travel expenses and other costs of Wigmore membership and results over the past three years suggest the investment has been extremely cost effective in light of the benefits achieved. “Everything involved with the Wigmore Association is something that sets Pitcairn apart from other family offices. Working with Wigmore gives our firm an aspect of thoughtfulness, research, and global sentience that none of our peers can claim. And we believe this uniqueness will continue to benefit our clients in the years to come.”
Benefits of Membership in the Wigmore Association
- A broader global perspective
- Access to regional expertise with a close contact in each region
- Different perspectives on asset allocation strategies and other family issues
- Shared manager research
- Shared due diligence and potential for co-investments
- Introductions to new products and investment approaches
In short, deeper thinking, richer information, and greater resources to better serve our families.