Hortz: Can you share some recent transactions you have helped facilitate?
Sondhelm: One client, a $50 billion institutional manager, wanted to unload three of their mutual funds to focus on their core institutional business. Before our engagement, they had a few conversations with other asset managers that did not go anywhere. We introduced them to an asset manager that wanted to reorganize all three funds and hire the manager in a sub-advisory role. They are thrilled at the energy the new distribution team is bringing so far.
Another boutique manager wanted to sell their only mutual fund to focus on their successful wealth management business. We found an asset management firm looking to start a mutual fund with a similar strategy. They acquired the mutual fund within about 6 months.
Another boutique firm wanted to sell its two mutual funds to focus on their institutional business. We found a larger firm with an established retail distribution system that wanted a sub-advisory relationship with one of the funds and merged the second fund into one of their own funds with a similar strategy.
One boutique institutional asset manager with a niche strategy is now managing $200m for a mutual fund family with distribution through subadvisory. The fund firm was looking to replace its existing subadvisor for a mutual fund due to lousy performance.
Hortz: What sort of firms are you trying to find new homes for right now?
Sondhelm: We are working on placing several managers right now. Here is our current list of available managers.
We have two former rockstar managers. Both managed billions for larger shops and then started their own firms. Challenged to gain assets, they are looking to be part of larger asset managers that can help with sales and marketing. One manages international large and small-cap. The other manages a short-term quantitative tactical equity trading strategy such as managed futures and shorting.
We have several managers that are looking to have their top performing mutual funds sold or reorganized into larger fund families with distribution. They want to become the subadvisor. Strategies include two niche fixed income strategies, two world equity strategies and an options-based strategy. AUM range from $30m to $600m.
We have two institutional asset managers looking for subadvisory in the advisor space. One specializes in global fixed income. The other has expertise in global macro/systematic trend following. AUM range from $2b to $5b.
We are also working with a fintech firm that is looking for a strategic partner. This firm is an investment research platform with a patent that predicts which stocks will go up or down. It was tested by several large asset managers and passed with flying colors. The firm wants a partner with a firm that can provide some capital to fund growth and some investment capital so they can subadvise a portfolio or mutual fund.
Hortz: What have you seen as to what makes a good strategic partnership? What should asset managers be looking for?
Sondhelm: If growth is important to you, make sure the firm offers distribution. I talk to asset managers who say they have been talking to a firm that wants to acquire them or launch a fund, but they have $250m AUM and one salesperson. It is unlikely a firm like this will be able to raise money for them.