LA money managers grapple with wildfire impact on operations, staff

Los Angeles — Los Angeles-based asset management firms are grappling with the impact of the region’s destructive wildfires on their operations, with some relocating office space and supporting staff members who have lost their homes.

The Los Angeles area is home to large industry players including Capital Group, TCW Group and asset management firm Oaktree Capital Management and Ares Management. In total, firms in Los Angeles manage more than $4-trillion of the $132-trillion in global assets managed in the US.

The fires have reduced entire neighbourhoods to smouldering ruins, leaving an apocalyptic landscape and devastating suburbs and wealthy enclaves.

“A number of our team members have been displaced and several have lost their homes completely, my family included,” Katie Koch, president and CEO of TCW, a firm that manages $203bn in assets, said in a letter to her Los Angeles colleagues that she reposted on LinkedIn.

TCW said all of its Los Angeles-based employees are safe and accounted for. Koch didn’t respond immediately to a request for comment, but a company spokesperson confirmed her home had been lost to the fire.

Anacapa Advisors, a $60.5-million hedge fund that moved into new, larger offices in Pacific Palisades only weeks before the fires, saw that building burn to the ground as the blaze, the largest of several fires sweeping across Los Angeles County, whipped through the community, according to a spokesperson for the firm.

In a letter to the firm’s clients, founder and CIO Phil Pecsok said all of its employees are safe and that the team successfully activated its business continuity plan.

They now are working remotely “with full access to trading platforms and risk monitoring systems”. They are placing orders for additional trading screens and communicating with each other continuously via Zoom, he said.

Pecsok didn’t respond immediately to a request for further comment. The spokesperson said Pecsok was working from a second home after evacuating from his primary residence.

Other asset management firms are taking precautionary steps as forecasts predict the region’s flame-fanning Santa Ana winds will persist until Wednesday, raising the risk that fires may spread further.

Oaktree Capital, which is based in downtown Los Angeles and manages more than $200bn in assets, remains open for normal business operations, said COO Todd Molz. Many of the hedge fund’s 700 employees in the area have been affected by the fires, he said.

“Our data centre in Los Angeles is equipped with backup power and is available without interruption in the event of regional or localised power outages caused by the wildfires,” Molz said.

Work from home

DoubleLine’s employees based in Los Angeles were working remotely this week due to the poor air quality, a spokesperson for the Florida-headquartered bond investment firm said.

The Milken Institute, a think-tank based in Santa Monica, and Dimensional Fund Advisors (DFA), an investment firm headquartered in Texas with nearly $800bn in assets and an office in Santa Monica, said they had switched largely to work-from-home arrangements.

The Milken Institute said it has closed its office, encouraging staff to care for their families and work from home; DFA said it was urging anyone able to work to do so remotely.

Kevin Philip, partner at Los Angeles-based Bel Air Investment Advisors, which manages more than $10bn in assets, said he and some of his colleagues were working remotely. “Covid really set us up for managing through this and keeping our functionality going,” Philip said.

Other large asset managers are further from the immediate danger zone, such as Pimco, which is based about 64km south of Los Angeles in Newport Beach. The company declined to comment.

Reuters