A recent wave of asset management start-ups provides a career reminder: when seeking work in any sector of finance, don't limit your search to big established names.
Fifteen companies started their first mutual funds during this year's first quarter, Bloomberg News reports, citing Morningstar data. That's three times as many as in the same period of 2009. And it doesn't include new managers operating through other legal vehicles, such as private placements or separately managed accounts.
New long-only asset managers usually require portfolio managers, research analysts and marketing, compliance and operations staff. They differ in that respect from new hedge funds, which tend to operate lean-and-mean on the investment side until they've built a track record, and hire no support staff at all because their prime broker handles those chores.
Illustrious Names Behind Recent Fund Launches
Some of today's newcomers have impressive track records and solid financial backing. Sanders Capital LLC - launched last year by Lewis Sanders, who was deposed as chief executive of AllianceBernstein in late 2008 - was engaged by Vanguard Group to manage 8.5 percent of the assets in the $37 billion Vanguard Windsor II mutual fund. The ex-CEO of another big firm, Gary Black of Janus Funds, started Black Capital Management in October. And of course there's Jeffrey Gundlach, the former TCW bond-fund star who exited amid a blaze of lawsuits last December. He brought more than 40 TCW employees with him to his new firm, DoubleLine Capital LP. Gundlach led TCW Total Return fund to a 7.5 percent annual return over the five years ended Dec. 4, outpacing Bill Gross's Pimco Total Return fund, according to Bloomberg.
On the down side, upstart investment management firms operate at a disadvantage in attracting assets vis-a-vis rivals who hold a place in brokers' sales channels and recommended lists. And like any new business, the risk of failure is high the first few years.
A number of specialized investment firms help seed asset management ventures. One, Seattle-based private equity firm Northern Lights, reportedly raised $80 million a few years ago for a dedicated fund that's invested in nine asset management companies since 2006. Another asset-management seed investor is Rosemont Investment Partners LLC, in West Conshohocken, Penna.
Other new fund companies mentioned in Bloomberg's story:
- Los Angeles-based Del Rey Global Investors, started by Paul Hechmer, who left Nuveen last June.
- Evermore Funds, started by David Marcus and Eric LeGoff, both formerly of Franklin Resources.
- International Value Advisers, started by former First Eagle Funds manager Charles de Vaulx. It's attracted $4 billion in assets since launching in October 2008.
- Ascent Investment Partners in St. Louis
- Balentine LLC in Atlanta.