OC Money Manager Tusan Handles $1B in Global Investments
Cynthia Tusan says she can get top executives at Toyota Motor Corp., Nintendo Co. and other global powerhouses on the phone within 24 hours, if needed.
Tusan, is managing director at Wells Capital Management,the money-management arm of Wells Fargo & Co. She oversees nearly $1 billion in global funds under management, and her main fund is among the top rated in the country.
Tusan from Newport Beach, together with her co-manager, Sabrina Yih, in San Francisco, heads a nine-person team. Seven of the team members are based in Wells Fargo’s home base of San Francisco, while one senior analyst is in Newport Beach with Tusan.
Tusan said she is here,rather than the financial hubs of San Francisco or Los Angeles,by choice.
“There are only advantages to working from Newport Beach,” Tusan said. “We are the stopping place between San Diego and L.A., so we have plenty of access to analysts and management meetings.”
She moved to Laguna Niguel in 1995 after getting married, and worked for Wells as a senior portfolio manager while getting her master’s of business administration at the University of California, Los Angeles.
“I decided to move to Orange County for personal reasons: husband, lifestyle, schools,” Tusan said.
Her husband, Robert Tusan, is an engineering manager at ADC Telecommunications Inc.’s Tustin facility, formerly PairGain Technologies Inc.
Tusan’s publicly traded fund, Wells Fargo International Equity, recently was ranked among the best performing international funds by Chicago-based mutual fund tracker Morningstar Inc.
The fund, whose top holdings include Royal Bank of Scotland PLC, Nestle SA and Nintendo, has averaged an annual return of around 3.5%, or 13% overall since 1998. While the results aren’t stunning, the fund has outperformed most of its peers.
So far this year, Wells Fargo International is off by 23%, but still above its peers. The fund’s big year was 1999, when the fund saw a 51% gain.
Tusan said that her life is more hectic these days, involving more time traveling and taking care of,and drumming up,business.
“I had two meetings (last week), one in Memphis, where I was presenting to a very large client,” she said. “Then I had one meeting in New York, where I was presenting to a university there,a prospect. Usually, I send our product specialists. But given the turmoil in the markets, I have been going out on these meetings and making sure all the questions are answered.”
The fallout from Sept. 11 was particularly hard on global fund managers. With U.S. markets closed in the aftermath of the terrorist attacks, overseas exchanges bore the brunt of investor fear. Tusan said her portfolio was down some 13% between Sep. 10 and Sep. 21. It regained more than that loss in the next three weeks of trading, she said.
Tusan oversees three other funds that invest globally but are not publicly traded. Most of the investments her team makes are in big-name European and Japanese companies. But they also invest in companies in emerging Asian markets.
Tusan started her career as a stockbroker with Dean Witter, now Morgan Stanley Dean Witter & Co. She said she realized during her stint selling stocks that she was more interested in analysis and equity research.
In 1987, she joined a private wealth and trust management company in Pasadena as a research analyst. Two years later, she joined Wells Fargo as a senior portfolio manager.
Tusan has risen through the ranks fairly quickly. Her decision to pursue a business degree,despite advice to the contrary,was a key factor, she said.
“One of the most important decisions I made was to go to business school,” she said, “and that was after an exhaustive survey of senior executives. They all had their MBAs but said they did not think I needed one. I decided to go with their actions rather than their words.”
Before getting her degree, Tusan also got her chartered financial analyst certification, a three-level program that’s a must in money management. The process helped in her understanding of investing and risk management, she said.
“It has been challenging navigating my way through the business world, since I consider both my parents academics,” she said.
Tusan’s father was a professor of economics who taught at Duke University, UCLA and other schools. He also worked as a senior economist in the Nixon, Carter and Reagan administrations. Her mother is an artist who taught art before quitting work to raise her family.
As a mother of two children,Christopher, 4, and Aline, 2,Tusan said she’s wrestled with issues that many working women do.
“Taking time for two maternity leaves as I did several years ago was not a problem,” she said. “But I can see now that had I been out on maternity leave this year, I might very well have missed the greatest career opportunity of my life, which is to run a leading international mutual fund and related accounts.”
In 1999, two co-managers in the international equity department at Wells asked Tusan to join their group as a senior analyst. She had been working for that department since 1996 as the head of the risk management group, which she created.
“When I joined, the international team was only four people, including myself,” she said. “Now the team has eight other people.”
Tusan took over running the fund in May when the two co-managers, Katherine Schapiro and Stacey Ho, left to join Milwaukee-based Strong Capital Management and two of its global funds.
“We just kept the same process going and expanded the team,” she said.
One of the first things Tusan did was to cut the fund’s cash stake from 16% to about 4%, by adding to existing holdings and reducing exposure to oil stocks when oil prices peaked.
Tusan also set up Wells Capital’s academic advisory board, which includes Phillipe Jorion, a finance professor at the University of California, Irvine, Graduate School of Management. The board looks at Wells Capital’s investment process and offers feedback on issues such as currency hedging.
Working from OC hasn’t been an issue, Tusan said.
“Wells Capital knew they did not have to ask me to move because they have been comfortable for some time with my ability to integrate well from Orange County,” she said. “You have to make people (in San Francisco) feel that you are next to them. If you tell them that you can’t do a particular task (because of distance) then they might ask you to move to San Francisco.”
There are positive advantages, too, she said.
“Having two locations diminishes the risk of business stoppage as a result of one office being closed for any reason,” Tusan said. “Wells Capital is very systems oriented and, frankly, I prefer to have conversations while I am looking at my computer and Bloomberg screens, whether it is talking with my co-manager or conference calling with analysts in San Francisco.”
While OC’s quality of life is high, most large money-management firms operate out of New York, San Francisco, Los Angeles or San Diego. The only other large mutual fund manager here is Pacific Investment Management Co., or PIMCO, which specializes in managing bond funds.
Investing globally is a different game altogether. On the plus side, fund managers have more companies to choose from. And some foreign markets offer higher returns with less risk.
On the negative side, global fund managers have to consider political risk, currency risks and overall economic conditions. They also have to counter investment critics who say there’s no need to go abroad when there are plenty of companies with global exposure to invest in here.
Still, many of Tusan’s investments are familiar names to most Americans.
“Companies that we invest in are globally competitive: Toyota, Nintendo,” she said. “Because they are globally competitive they are operating efficiently. Nintendo has a monopoly on handheld (video game players).”
Tusan has around 2.75% of her fund invested in Nintendo.
Tusan said she and her team set out to identify trends, either short- or long-term. Take Germany, she said. The country recently instituted private retirement accounts for the first time and lowered corporate tax rates from 45% to 25%.
“Both actions are part of a longer-term trend of significant tax and pension reforms,” she said.
Tusan is looking to get in on changes in Germany through her investment in Allianz AG, which makes up about 2% of her fund.
“This year the team has focused on a keeping-it-simple strategy, investing more in companies with better defined sources of revenues and cleaner balance sheets,” Tusan said.
Before Tusan buys a stock, she and her team run through a five-factor fundamentals screen and then a risk-analysis model. The five factors the team looks at are valuation, growth, risk, management and sentiment. From there the team arrives at a composite score on a five-point scale.
“We use this process in also deciding when to sell stocks,” Tusan said.
Possible investments also are scrutinized for risk, using tools that try to ferret out exposure “you can’t see with naked eye,” Tusan said.
“Two stocks in the same industry could act very differently. We believe that you need to use these tools so you don’t get trapped,” she said.
While math, finance and analytical thinking are at the heart of money management, Tusan said she balances her work with creativity and art.
“I love contemporary art and feel strongly about having a place where we can see first hand cutting-edge works,” said Tusan, who’s done fund-raising for the Orange County Museum of Art in Newport Beach.
“While so much of the artwork is controversial, it forces us to think creatively. Creative thinking is very important in what I do here.” n
