ROSS GOOBEY, GEORGE HENRY - AIM25

Identity area

Reference code

GB 0074 LMA/4481

Title

ROSS GOOBEY, GEORGE HENRY

Date(s)

1905 - 1999 (Creation)

Level of description

Collection

Extent and medium

7.45 linear metres

Context area

Name of creator

Goobey , George Henry Ross , 1911-1999 , pension fund manager

Biographical history

Goobey, George Henry Ross (1911-1999), pension fund manager, was born at 42 Blair Street, Poplar, London, on 21 May 1911, the younger son and third child of Herbert Goobey, a shopkeeper and Primitive Methodist lay preacher, and his wife, Elizabeth Ross. An adept pupil at elementary school, he was encouraged by a local Church of England vicar to enter for a scholarship at Christ's Hospital. There he shone in mathematics, and much later became a governor.

Unable to afford a university education, on leaving school in 1928 Goobey joined the British Equitable Assurance Company as an actuarial trainee. He played rugby for the Eastern Counties and gained cricketing repute as a hard-hitting batsman. On 4 September 1937 he married Gladys Edith (b. 1911), daughter of Charles Menzies, a local government official in Poplar; they had a son and a daughter. Having in 1939 moved to the South African company Southern Life Assurance, he and his family were about to embark for Cape Town when the outbreak of war disrupted their plans.

Instead Ross Goobey (he adopted this as his surname) worked successively for several British insurance companies, served in the Home Guard, and qualified in 1941 as a fellow of the Institute of Actuaries. At the relatively youthful age of thirty- six, he was appointed in 1947 the first in-house investment manager of the Bristol- based Imperial Tobacco Company's pension fund, then valued at £12 million. In common with most such funds, its assets were almost entirely invested in government bonds, known as gilt-edged stocks.

Ross Goobey strongly maintained that the government's recent issue of a 2.5 per cent undated stock, at a time when inflation averaged 4 per cent, was nothing short of a swindle. Meanwhile the average portfolio of British equities was yielding 4.3 per cent, having moreover the expectation of future growth. He therefore proposed to his investment committee, chaired by Sir Percy James Grigg (a director also of the Prudential Assurance Society), to switch the pension fund out of gilt-edged into equities. He argued that, although the company's existing portfolio would have to be sold at a loss of £1 million, that loss would soon be recouped by higher equity returns. Ross Goobey's views were based on two articles by Harold Ernest Raynes, a director of Legal and General, in the Journal of the Institute of Actuaries in 1928 and 1937, which demonstrated from twenty-five years' research that company dividends tended to rise in real terms even in periods of deflation. The investment committee eventually accepted his advice. As most other pension-fund managers followed that step, he had inaugurated a new era in Britain's fund-management industry.

Ross Goobey's overturning of conventional wisdom initially provoked resentment in the City of London, especially as he relied so little on City expertise. A well- publicized dispute with the chief actuary of Prudential in the early 1950S fuelled suspicions there of his intellectual arrogance. His light-hearted remark, about finding shares so cheap and plentiful that he felt like a child in a sweet-shop who had discovered everything at knock-down prices, did nothing to improve relations. Not until 1998, at the age of eighty-six, was he given the first-ever award of honour, as a past master, of the Company of Actuaries. He was also master of two other London livery companies.

Rather than dealing in prestigious blue-chip companies (and paying commission) in the stock market, Ross Goobey sought out smaller and medium-sized companies, mostly based in the west country. He preferred to negotiate directly with their chairmen, once at least hammering out purchase terms until 3 a.m. in a night-club. Before merger mania set in, his fund held about 1000 separate equity holdings. Although some of these did poorly, the overall performance of his portfolio was second to none, with yields on cost for a time reaching double figures, in years of moderately low inflation.

In 1972 Ross Goobey was elected president of the National Association of Pension Funds. By then he had discerned-ahead of his competitors-that company shares had reached their peak, and he moved into commercial properties, mainly in London. Yet when the stock market slumped in 1974 he began to buy gilt-edged, since war loan was then yielding 16 per cent. Even though the merchant bank M. Samuel (later Hill Samuel) attempted to woo him away with a much higher salary. he remained loyal to Imperial Tobacco, which rewarded him with a seat on its main board and permission to become a non-executive director of M. Samuel.

Ross Goobey was tall and well-built, his imposing figure prompting some City journalists to dub him the archdeacon of the equity cult. To be sure, his full moustache, carnation in the buttonhole, and fondness for cigars, socializing, cliffhanging bridge games, and telling risqué stories, plus a conviction that his judgement was always right, belied any churchy image. Yet he never strove after great riches, served for three years as chairman of Clevedon town council, and actively involved himself in local sports. After retiring in 1975 he was until his eightieth year chairman of the property company Warnford Investments. He also took up golf, regularly playing thirty-six holes a day, and was appointed president of the Somerset County Golf Union.

He died of heart disease in Weston-super-Mare General Hospital on 19 March 1999, fit and active almost to the end. His son, Alastair, followed in his footsteps by becoming chief executive of the Hermes pension fund group, being honoured by the state (as the idiosyncratic George Ross Goobey never was) with a CBE in 2000.

Source: T. A. B. Corley, Oxford Dictionary of National Biography, Oxford University Press, 2004

Repository

The London Archives

Archival history

GB 0074 LMA/4481 1905 - 1999 Collection 7.45 linear metres Goobey , George Henry Ross , 1911-1999 , pension fund manager