A Wide Umbrella

June 2, 2009

Most financial services firms would be proud to trace their origins back to just a few decades. Nuveen Investments in Chicago can trace its roots back to the 1890s, when it financed the building of roads, bridges, sewers and other infrastructure in the growing Windy City.

The firm has now grown and transformed into an asset manager for wealthy individuals and institutions that has a group of boutique investment firms under its umbrella, each specializing in a particular market area.
Nuveen most recently added Minneapolis-based Winslow Capital Management to its collection of independent asset managers. Winslow and Nuveen's six other boutiques manage about $130 billion in assets for clients. Nuveen has about 950 employees.

"Ours is a unique business model that gives us an advantage throughout various markets," says Mark Anson, Nuveen president and executive director of investment services. Anson, previously the CEO of the British Telecom Pension Scheme and CIO of CalPERS, says he is able to bring to Nuveen a deep understanding of the institutional marketplace and its more sophisticated strategies, which are increasingly being used by high-net-worth individuals.  

The bedrock of the Nuveen investment strategy is to support its independent investment teams as they explore different areas of the market, each relying on their particular expertise, Nuveen officers say. In addition to Winslow Capital, Nuveen works with HydePark, NWQ, Nuveen Asset Management, Santa Barbara, Symphony and Tradewinds.

The firm handles investment assets institutions and for individuals falling mostly in the $1 million to $20 million range.

"We have a heritage of private equity financing that dates back to long before it became the hotbed of interest it is now, more than 100 years later," Anson says. "We did successful infrastructure investment banking for 60 years, and then in the late 1960s and 1970s, we entered the retail municipal bond market. From there, we built our expertise with independent asset managers, each with their own unique research team.  Today, we have highly specialized portfolio management and analyst teams that look at all the market possibilities and evaluates them based on clients' needs."
That research has led Nuveen to some different conclusions, says Anson.

"For instance, in the municipal market, most managers have relied on an insurance wrapper around municipal bonds. We rely heavily on our own credit research, which put us in good standing throughout the liquidity crisis of the last two years," he explains. "We also look at the larger economy and the opportunities it provides.

"We are in a recession that is already deeper and longer than that of 2001 and 1990-1991. My own personal sense is that it will continue into the fourth quarter of this year and it is affecting every developed nation. Globally, we are seeing an economic slowdown that dictates being more conservative," Anson adds. "We are keenly aware of the rough sledding that is going to continue for the course of this year, and look to our boutique asset managers to know their individual market areas well."

The newest manager, Winslow Capital, is a large-cap growth manager with $5 billion in assets under management. The firm is considered more aggressive than most with a talented, embedded team of portfolio managers.

"Like the other firms that came under our umbrella, Winslow will maintain their separate identity for branding, investments and process. We supply the back-office and middle-office management, but we let them do the investing," Anson explains.

Tradewinds, which specializes in global equity through both top-down and bottom-up analysis, is an example of a company operating under the Nuveen umbrella. Dave Iben, chief investment officer for Tradewinds, which has $20.6 billion under management, explains, "We manage global portfolios. Our research team is structured with a global-sector focus, which gives us the knowledge base to scour the globe looking for compelling opportunity whether the company's headquarters are in Phoenix or in Mumbai. We look for value investments that are mispriced that others do not see or that computers cannot identify.

"Tradewinds likes to buy assets for less than they are worth, which everyone does, but what sets us apart from the other value investors is that we have a more people-oriented, research intensive approach. The work of the individual sector analysts is constructively challenged and ultimately enhanced through daily investment team discussions. This creates an environment characterized by intensive information collection, assessment and collaboration," Iben adds.

"We understand our global industry sectors very well and seek to capitalize on the market opportunities that are presented by both positive and challenging change."

Constance Lawton, Tradewinds co-president, adds, "We have a centralized team of highly skilled analysts who research companies irrespective of the ultimate portfolio. Each prospective investment goes through the same analytical process to see if it should be included on our approved list. All Tradewinds portfolios are assembled from the same approved list, which ensures a uniform approach to philosophy, process and level of due diligence. Further, our association with Nuveen is a good one. They supplement our investment expertise with world class assistance in areas such as sales and marketing, legal and compliance and human resources."  

With the assistance of the independent firms under it, Nuveen manages billions in separately managed accounts that cover the spectrum from large-cap growth to international value to balanced funds.

"Within this market Nuveen is known for managing customized portfolios of high-quality, large-cap growth stocks, multi-cap value equities and both taxable and tax-free fixed income investments," Anson says.

Nuveen also offers a variety of closed-end funds, including national or state specific municipal bond funds, real estate, and global debt as well as preferred and convertible securities.

It continues to offer advisors of the high-net-worth the best-of-breed in mutual funds, and also handles institutional separately managed accounts, including large-cap equities, convertible arbitrage and credit arbitrage for U.S.-based corporate and public pension funds, university endowments, foundations and insurers.

Alan Brown, Nuveen executive vice president adds, "As a firm, we try to look like an ideal portfolio, with diversified institutional-caliber offerings. But it all goes back to what makes us different. Our conservative municipal heritage has us rooted in risk management, but we understand the importance of investments across the risk spectrum. When we go into a sector, we get a strong manager and each of our affiliates shares our commitment to risk management."

The changing market is combining with the longer expected life span for retiring baby boomers to bring new challenges to the financial industry.

Brown says, "Over the years we have invested heavily in wealth management services. We have a team that works closely with our advisor clients on everything from stocks to philanthropy to  how children of affluent families handle money."

One client who was CEO of his own company recently approached the firm for assistance with selling the company as he retired.

"He had a considerable payout when he sold the company and this was the first time he had ever had to consider diversifying his investments. He had to develop an investment strategy to meet his needs for what will probably be 20 to 25 years of retirement. He also wanted to be active philanthropically," Brown says. "He looked to us to work with his financial advisor to diversify his investments, and his advisor knows he can come back to us and ask if estate or tax laws have changed and how that might impact his portfolio, or address his other investment needs.

"What is important to know is that when we work with advisors, we try to help them with high-quality strategies that complement their existing plans for their clients to help them achieve their long-term investment goals." adds Brown.
The age of retirees is particularly important now, agrees Anson. "We know most people have a much longer runway of retirement, so we still have to plan for high-quality equity and income growth even after retirement. We need to be more conservative than if the  person was a teenager but we need to continue to build equity. And drawing upon their institutional expertise, we believe our boutique firms are experts at this type of planning."