Management of Cutler & Co. Inc. is trying to harness the boutique concept, rather than becoming a multiproduct firm.
Cutler, a Medford, Ore., firm that manages about $700 million, is recasting itself as a haven for specialist managers around the country who want to run money their way from their home base, while letting headquarters worry about marketing and administration.
In the last year, Cutler has hired investment managers and teams around the country, set them up in regional offices and introduced their investment styles to its client base.
Cutler has even taken a step into international investment management by signing an agreement to represent Credit Lyonnais Asset Management International, Hong Kong. Cutler will market the firm's full range of Pacific Rim ex-Japan equity products to U.S. institutional investors.
Thanks to the agreement, Cutler can offer a more diversified product to its core clientele of large public and pension plans without the trouble and expense of developing such a strategy on its own, said Brooke Cutler Ashland, chief executive officer. For Credit Lyonnais, the deal gives it access to institutional investors without setting up its own U.S. marketing operation, she said.
Since the proliferation of entrepreneurial firms, there has been a rethinking of the boutique firm concept, said Ms. Cutler Ashland.
"You basically had people going into business that were portfolio managers and are not really running those firms. In my opinion, performance has suffered....."
Cutler was a boutique focused on high-yield equity, with a dividend-driven equity product as its sole line of business. It still offers that product, but it is diversifying into other asset classes and is using technology to attract talent for those efforts, said Ms. Cutler Ashland.
Ms. Cutler Ashland was a founding partner of the firm 17 years ago with her father, Kenneth Cutler. She left in 1990, then returned last year, hoping to re-engineer the firm. She developed a model for what she says will be the investment management firm for the next decade - one more driven by marketing and service and making more use of technology.
Firms don't use technology as much as they could, said Ms. Cutler. She noted Cutler's aim is to be a 24-hour firm, so it uses computers in both portfolio management and client service so clients can survey portfolios any time by dialing into Cutler's system.
"We equal technology with client service. It's not just taking them out to dinner, it is giving them information quickly and accurately when they need it," she said.
The firm upgraded its technology with an accounting package that would allow personnel to stay where they were and created a safe haven for portfolio managers who didn't want to deal with administrative chores but wanted to run their own show.
Cutler's trading and administrative functions will be centered in Medford, and marketing, client service and the investment management functions will be decentralized among offices around the country. The firm has used its approach to lure talent and to expand its reach:
John Ray, who runs a small- to middle-capitalization equity strategy from Atlanta, was president and chief investment officer of Commerce Capital Management Inc., Memphis. Cutler recently received $10 million assignment for this strategy from Middlesex County (Mass.) Retirement Board.
William Gossard, a core fixed-income manager from Banc One Investment Advisors Corp., joined Cutler along with his head trader, Joellen Macbeth. They will stay in Indianapolis, where Mr. Gossard will build the firm's fixed-income department.
Cutler also added several marketing and client service professionals around the country. Michael Dishberg is a former senior consultant from Prudential Securities Inc. based in New Orleans, and Michele Frost is a former marketer from Commerce Capital, Nashville. Mike West, formerly with Marathon Asset Management Co., San Diego, handles the California client base, and Ed Chun, a former Frank Russell Co. consultant, is based in Medford.
Many firms try to stress the "team approach" style of management to avoid problems when managers leave, but Cutler would rather encourage star managers to shine, said Ms. Cutler Ashland.
"I believe in the star system. I don't believe in burying the records of the managers," she said.
The firm is now 100% employee-owned, said Ms. Cutler Ashland. As existing shareholders retire, they will be bought out and their shares issued to new people, so there are no passive investors in the firm, said Ms. Cutler Ashland.
