The secret to compounding earnings is not an investment strategy

When Damien McIntyre and Andrew McKinnon launched GSFM in 2007, they had no idea they were about to walk straight into the eye of the storm: the global financial crisis.  

It took 61 months, just over five years, before GSFM had a single month where revenue exceeded expenses. Most people would rather forget such numbers than repeat on a podcast.

But for McIntyre, now CEO of GSFM, it’s central to the story of how his business was built, and exactly why he’s the latest guest on Capital Conversations.

What is Capital Conversations?

In every episode of Capital Conversations, host Steve Robertson goes behind the scenes with the people who raise capital and build lasting businesses in Australia’s wealth and asset management industry, exploring the art and science of what it truly takes to succeed, well beyond the headlines and the market calls.

Building in the eye of the storm

McIntyre’s path into funds management started in stockbroking in the early 1990s, at what was then Potter Warburg, before a string of mergers took him through Mercury Asset Management and eventually Merrill Lynch.

By the time he and McKinnon struck out on their own in 2007, McIntyre had spent more than a decade building relationships with financial planners across Victoria and Tasmania, learning, as he puts it, who was who in the zoo.

However, none of that experience made the first five years of GSFM easy. Markets fell apart within months of the business launching, and McIntyre and McKinnon had to build a client base for their fund managers from nothing.

What got them through, McIntyre says, was leading with a differentiated product, a global dividends fund with Epoch Investment Partners, at a time when almost nobody else in the Australian market was offering global income exposure. At its peak, the fund helped the pair raise $4.5 billion.

For Robertson, that story of building something real in the middle of a crisis is why McIntyre makes for a great guest.

“Damien started GSFM at the worst possible time, with no revenue for the best part of five years and a young family to support”  Robertson says.

“The fact that he and Andrew came out the other side with a business that went on to raise billions says everything about the discipline it takes to build something that lasts, rather than something that just looks good in a good market.”

The discipline of staying consistent

Robertson notes that what truly sets McIntyre apart as a strong capital raiser is his consistency, the very theme at the heart of this week’s episode.

“Damien is adamant that underperformance is simply an occupational hazard of this industry, and that the real test of a capital raiser is how visible and honest you are with clients when things aren’t going well,” Robertson says.

“He talks about the importance of making sure clients are always in a position to make an informed decision, whether that’s to hold or to sell, and that discipline is what earns the kind of trust that survives a downturn”

Robertson also points to McIntyre’s approach to building teams as a defining part of his success.

“Damien looks for integrity above all else when he’s hiring, and a genuine work ethic, people who like the job in good times and bad,” he says.

“He’s got a great line about it: he used to hire the smartest people he could find and hope they were good people, and over time he flipped that around entirely. Now he hires the best people he can find, and hopes they’re smart. It’s a small shift in thinking, but it says a lot about what he values.”

What listeners should take away

For Robertson, the lesson McIntyre offers listeners is a simple one, even if it’s not always easy to live by.

“Capital goes where it’s treated best, and Damien has built an entire career around that idea,” Robertson says.

“Being consistent through the good times and the bad, staying visible when you’d rather disappear, and always keeping the client’s interests front and centre. It’s not a flashy strategy, but it’s the reason GSFM is still standing nearly two decades after starting in the middle of a financial crisis.”

Capital Conversations, featuring Damien McIntyre, is available now on the Capital Outcomes website, Spotify and Apple podcasts.