From outback Queensland to the world: Nikki Thomas' funds management journey

Magellan's Nikki Thomas has seen a lot of the world in more than 20 years in markets. But it's her background that's even more amazing.
Hans Lee

Livewire Markets

To say Nikki Thomas has followed an unconventional route to investment banking is a gross understatement. She was born in a Queensland town called Cunnamulla. Its population is just over 1,000 people and its primary industry is farming. Then, she went to boarding school in Sydney - which was a massive culture shock in and of itself.

"I'm from the bush and I'd been at boarding school for years. I could see all these tall buildings in the city but I didn't know what people did in them," Thomas recalls. 

That was more than two decades ago when she first started as an undergraduate accountant at PriceWaterhouseCoopers (PwC). Several organisations - and a few career pivots later - she's now the co-portfolio manager of the fund she helped set up: Magellan's Global Fund. She recently re-joined the firm after several years at another global equities boutique - a move that made headlines across the funds management industry.

In this wire, Thomas discusses the balance of being a working mother and one of the country's top global equities money managers. Thomas is appearing in this series as part of Livewire's coverage for International Women's Day, showcasing Australia's top female money managers and asset allocators.

Magellan's Nikki Thomas.

Nikki's Profile

Name: Nikki Thomas, CFA

Firm: Magellan Group

Years in the industry: "Comfortably over 20"

Speciality: Global equities

Biggest personal portfolio holding: Magellan's listed portfolios

One thing very few people know about you: Thomas is a keen motorbike rider, from her days on the farm mustering animals! Even as a young mother, she rode motorcycles to work and she's just recently finished a motorcycling trip in Tasmania.

Your guilty secret: "The one that is most embarrassing is I've just driven two hours south of Sydney and I did what I always do, and that's listen to company calls! I genuinely enjoy doing it and you hear really interesting insights. I find it really stimulating and interesting."

Vroom, vroom! (Supplied)

The early days

Nikki's story begins as an undergraduate at PwC while studying at the University of New South Wales where she attained an accounting degree.

"Numbers have always spoken to me," she says. "It was a great way to get into business."

After that, she spent more than a decade in stock broking - first as part of the famed Bankers Trust's equities team, then at Deutsche Bank. Although Thomas is now recognised for her work in bringing global equities to Australia, she wasn't sure she would get that first gig.

"I applied for a job that, to be honest, was way ahead of what I was qualified to do," Thomas says.

But as it is with so many great investors and leaders in their field, everything starts with a mentor. Thomas was no different. Her mentor was Hugh Dougherty, the then head of company research at Bankers Trust. Dougherty himself had an illustrious career which included top roles at AMP, Merrill Lynch, and Credit Suisse.

"He gave me a job in broking and he was a great mentor because he encouraged me to educate myself on investing," she recalls. That last bit of advice led to Thomas earning the CFA in 1997.

Eventually, Thomas moved on to Deutsche Bank - a move which she says was symbolic of the attitudes at that time.

"In those days you were just seen as the young kid and to progress you had to move on," Thomas says.

The opportunity at her current place of employment came in 2007 when Magellan was in its infancy as an organisation.

"A friend of mine was joining and had been approached. She rang me and said 'I really want to do this with you'. So I set up a meeting with Chris and Hamish, and immediately, I aligned with their investment philosophy," she remembers.
"That was fortuitous. It was a big risk at the time but it was also just one of those unique opportunities that come about." 

The rest, as they say, is history.

Timber! (Supplied)

And speaking of investment philosophy...

Thomas has one golden rule for anyone trying to get a job in the world of funds management - make sure you're aligned with your employers’ investment philosophy or style .

Outside of that, Thomas' investment philosophy still draws from her experience at PwC. That is, use numbers to build scenarios.

"Part of what drives my process is modelling and building a financial scenario, seeing what the future looks like in numbers," Thomas says. "Those financials just reflect your view of the future opportunity that lies ahead for a business. It allows you to determine the value of a company. For me, it's a really important part of the puzzle."

"Given I helped set up the process that brings the Magellan philosophy to life, it's not that surprising the two are aligned," she remarked.

Her advice for young female investors

Much like every other great investor, Thomas views hurdles as opportunities. Luckily, as this glass-half-full approach was needed at times in earlier years of her career.

"There was a period where broking had a cultural distaste for working mothers," Thomas recalls. "Once you became a mother, you had this big red dot on your back."

Redundancy offers during a maternity leave was not as uncommon as it should have been.

"It was a fairly strong indictment of what was going on banking," she says before admitting that was a time when you just had to roll with the punches.

These days, Thomas has a far more philosophical view of changing jobs. 

"Change can be wonderfully cathartic," she remarks. "My advice to younger women is to believe in yourself."

"Sometimes, you just have to trust the process and do it. Take a leap of faith. It will all work out," she adds.

The state of the profession

While Livewire has compiled more than 100 female fundies, money managers, and asset allocators in its survey, the ratio is still by far and away heavily skewed towards men. When I asked Thomas why she thinks that ratio is still so poor, she gave two reasons. One of these has already been mentioned - the industry's history of ill-acceptance of working mothers.

The other reason is ongoing.

"When a woman leaves the workforce to become a mother, that's a really important choice in life. It doesn't mean you don't care about your career - sometimes, it's a decision because you're the breadwinner or it's something that, in your relationship, is the sense choice," she says.

"It should never be seen as secondary to a career path. We still have to do work around that - particularly how to ease women back into the workforce and encourage them to want to do it."

She also noted that society is becoming more accepting of mothers returning to the workforce in general. 

"I don't think we should feel bad if a large part of the female cohort in any age bracket make the choice to bring up their kids as a first priority. It's actually a great choice but the choice to return must be made equally available," she says. 
Nikki, her mother, her husband, and her three children. (Supplied)

Thomas' market views - and her top stock pick

Thomas' own thoughts are that markets have not priced in the risk of higher for longer interest rates, though that has started to correct. She believes 2023 will be a choppy year - with unpredictable inflation data driving interest rate expectations meeting by meeting.

"The one big risk is a recessionary environment that is worse than what people are currently pricing in. It’s not our base case but it’s possible and it’s not priced," she says. 

This leads to questions about opportunities that are not priced for such an environment. Thomas nominates looking for beneficiaries of large secular opportunities.

"This encapsulates the three big buckets of opportunity that are out there if you take a longer-term view. The three buckets are decarbonisation, deglobalisation, and digitisation, and they capture a lot of what will be exciting and show secular growth for the next five, 10, and 15 years," Thomas remarks.

"Things like the Inflation Reduction Act and the CHIPS Act in the US are major policy decisions that were missed by the market for a while. But big picture, they meant massive regulatory and policy decision making in support of zero carbon and in support of on-shoring supply chains," she adds.

One such opportunity benefitting from these is the Dutch company ASML (NASDAQ: ASML).

"This is an extraordinarily well-positioned business with wonderful tailwinds behind it," Thomas says. "If you do any analysis on it, you'll find it doesn't trade on a crazy valuation. It looks about right and the market's fairly valued this one," she adds.

On the longer horizon, she says the business could deliver high teens compound growth and so should trade materially higher over time. Ultimately we think it could be worth double what it's currently fetching.

"Why would you not own that?" she asks.

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Hans Lee
Content Editor
Livewire Markets

Hans is part of Livewire's content team. He is the moderator and creator of Signal or Noise. He also writes the LW-MI Morning Wrap on Tuesdays and Thursdays.

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