January 8, 2015

One strategy for growth is an illusion

Woman appearing to hold tiny man in her hand at the beach : Stock Photo
Bill Gross added personal money into his fund. It's an illusion
to make it appear larger to sophisticated investors. This woman
isn't really holding a tiny man in her hand at the beach.
Bill Gross has brought in more than $1 billion into his Janus Unconstrained Bond Fund since he left PIMCO. But investors may not be flocking to his fund just because he is a star manager.

According to a story in the Wall Street Journal, more than 60 percent of the assets flowing into the fund in the initial months came from Bill Gross' personal financial advisors office. Why? One possibility is Gross really wants to eat his own cooking and invest in his own fund.

Another may be he knows in order to position his fund competitively with pension funds and other sophisticated investors, his fund would have to reach certain asset levels. He knows it's is easier to grow through his own money, his personal advisor client money, or other internal audiences, than outside investors.

Some firms require $1 billion to be considered. Others require $100 million.

As one client told me, "The first billion was tough. Each additional billion became exponentially easier."

I've heard similar comments from boutiques that the initial $50 million was challenging but once that point was reached, each additional $50 million became easier.

We often suggest to clients they add personal, family money or assets from separate accounts into the fund to make the fund appear larger, if they can. That inflated asset level, although an illusion, can make the difference between getting a sale versus dealing with a size objection.

Did you consider adding internal money to your fund to make it appear larger?

December 17, 2014

How fund managers can gain more value from their service providers

hasiwhitepaperAlmost by definition, smaller or boutique money managers must do more with less. Enterprising boutiques that have a story to tell should periodically evaluate service relationships for “value-added” capabilities that could contribute to your firm’s success. In their latest white paper, Huntington Asset Services Jeff Young provides measurement tools to help your decision makers evaluate service providers.

Download the white paper

* Huntington is a SunStar Strategic client.

December 15, 2014

Morningstar: Passive equity and active bonds dominate


Morningstar’s most recent U.S. Asset Flows Update is once again dominated by two stories: the continued trend towards passively managed equity funds, and fluctuations in the active taxable bond group. As 2014 draws to a close, the U.S. equity group continues to see inflows to the passively managed side, while the actively managed side sees outflows. Morningstar reports that over a trailing one year period passive equity funds have increased by $156.1 billion, while active equities have shrunk $91.9 billion.
During November, the active taxable bond group saw its first positive flow since August. Bill Gross’ exit from PIMCO in September set the category on its ear, but confidence appears to be returning as investors begin to explore other taxable-bond options.

For the full report, please click here.

November 26, 2014

IMPACT, INSITE: Planning for advisor conferences in 2015

Conferences are a great way to meet and strengthen relationships with financial advisors. They are also a great way to promote your brand. The biggest benefit, though, is to support influential organizations such as Schwab or Morningstar. They know (and remember) who their sponsors are.

MME: Why It's Time to Rethink Your Distribution Strategy

Many mutual fund firms want to grow beyond their existing client base. They want to generate demand through third parties such as Schwab, LPL or Merrill Lynch. Although obtaining selling agreements with these firms can be expensive and time-consuming, eventually most firms gain access.

Access, however, doesn't automatically mean sales. Competition with the largest name brands is fierce. 

Do you have a good story to tell, but find that investors aren't paying as much attention as you'd like? Or perhaps you've been building your distribution and are looking for ways to improve your strategy? 
 
The end of the year is the perfect time to think about what you accomplished and what you want to accomplish in the next twelve months. This checklist will help ensure you've thought through the major considerations to plan your distribution strategy for 2015.

Click for the full story written by SunStar's Dan Sondhelm featured in this week's Money Management Executive.

What strategies did I leave out?