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BALANCE: Wetherby aims for global market returns, with 60% of the risk. Photo: Winnie Wintermeyer for Barron's

Debra Wetherby started her career as an accountant, and she says her clients’ portfolios are the better for it.

“Maybe it’s my CPA background, but I’m a real believer in fundamentals,” says Wetherby, 57, whose team manages $3.7 billion of assets.

That focus paid off during the dot-com bubble and the 2008 crash. While many indexes and domestic money managers saw losses of 30% or more, Wetherby’s typical client lost much less—about 12% in the dot-com crash, for instance. In the wake of the real estate crisis, she snapped up underpriced bonds and stocks while fearful investors remained on the sidelines. “It’s about buying not just the right things,” she says, “but the right things at the right price.”

Wetherby says her approach mimics global market returns, but with just 60% of the market’s risk—a result that’s just fine with her conservative clientele. Today, two of the best opportunities lie in the arenas of master limited partnership and private equity, she says.

Wetherby, who ranked 26th this year on Barron’s list of Top 100 Women Advisors, has always been fascinated by money. At age 6, living in Ireland with her family, she reveled in calculating European currency conversions. So it came as no big surprise when, in 1980, she started her career as a certified public accountant at Price Waterhouse. Later, in 1985, she earned an M.B.A. from the University of California, Berkeley, and joined Morgan Stanley as an advisor. In 1990, seeking more flexibility in the way she served clients and built her practice, she opened Wetherby Asset Management in San Francisco.Today, Wetherby and her team of 60 serve more than 500 client households.

WETHERBY DOESN’T EXPECT GLOBAL markets to awaken from their slumber anytime soon. But she does see an intriguing opportunity in the market for secondary private-equity interests. Private-equity investors seek to unload their interests for a variety of reasons: They may be changing their asset allocation, liquidating an estate, or simply experiencing a cash crunch.

While the largest sales attract plenty of competition among big buyers, smaller ones are currently yielding discounts of as much as 35% below their assessed value, Wetherby says. She gains exposure to the secondary private-equity market through Headlands Capital Advisors in San Francisco.

WETHERBY ALSO SEES MAJOR upside in midstream MLPs. The oil crash has demolished MLPs, with the Alerian MLP Index down about 50% from its August 2014 peak. Midstream MLPs, which focus on the processing, storing, and transmission of oil and gas, have been walloped along with the rest.

That’s undeserved, says Wetherby, since low oil prices haven’t hurt overall demand for energy. For investors with a time horizon of 3 to 5 years, midstream MLPs should pay off nicely—and in the meantime, they deliver yields of about 13%, she notes.

“At some point, people are going to realize [that midstream companies’] revenues are under long-term contract and not related to energy prices,” she says. “They’re going to be happy to be paid 13% while they wait.”

Wetherby’s midstream MLP exposure comes through Eagle Capital Management’s MLP Strategy fund [ticker: EGLIX]. Indeed, Wetherby sees much more value in hiring money managers than in picking individual investments herself. Favorites include Charles de Vaulx and Charles de Lardemelle, whose IVA International fund (IVIQX) has posted an average annual return of 9% since its 2008 inception.

Another go-to fund is Generation IM Global Equity. Run by Generation Investment Management, a company founded by Al Gore and former Goldman Sachs Asset Management CEO David Blood, the fund focuses on companies that are both socially and environmentally responsible. Over five years, IM Global Equity has returned 12.1% a year on average, compared with the MSCI All-Country World Index’s 9.52%.

Wetherby has significant exposure to high-quality European stocks, and expects solid if not spectacular results within a three-year time frame. The region’s money supply is growing as a result of monetary easing, and some of that money should find its way into the stock market, she reasons.

In addition, the weak euro is a tail wind for companies ranging from SAP to Heineken, which are enjoying an exchange-rate advantage, she says. And European stocks remain cheap relative to earnings. “There’s been a whole series of story lines about how Europe’s not a great place to invest,” says Wetherby, “and that’s driven stocks down.”

A lifelong bookworm, Wetherby devours some 50 tomes each year. She’s currently working her way through The Boys in the Boat, Daniel James Brown’s account of the U.S. rowing team’s road to the 1936 Olympics in Berlin. As a team leader, Wetherby sees a clear lesson in that success story. “It’s all about teamwork,” Wetherby says, “and the value of the team over an individual.”
 Debra Wetherby Discusses Asset Management Strategies


