NEW YORK - Albert Zesiger's new investment firm has accumulated more than $1 billion under management - about 90% of which came from Mr. Zesiger's old employer, BEA Associates.
Mr. Zesiger formed Zesiger Capital Group L.L.C., New York, in October, following the expiration of a five-year employment contract with BEA. A co-founder of BEA in 1969, he had signed an employment contract as part of a deal in which Credit Suisse, Zurich, bought most of BEA in 1990, he said.
Zesiger Capital's assets under management include: $300 million from the Oregon Public Employes' Retirement System, Salem; $45 million from the City of Milford (Conn.) Retirement System; and $12 million from the Roanoke College, Salem, Va.
BEA's executives confirmed Mr. Zesiger manages about $900 million previously run by BEA.
J.R. Sartor, chairman of Milford's retirement board, said that after Mr. Zesiger left BEA, the board members "saw that there would be a change in (investment) philosophy," and as a result, moved $45 million run by Mr. Zesiger at BEA to his new firm. Milford has $163 million in total assets, and Merrill Lynch assisted the fund's board.
"We don't feel we switched, we feel we stayed with Al," Mr. Sartor said. "He's a very innovative guy," he said. "We ask his advice" on investment matters, based on his success at managing money for the city, which has contributed to the fund's overfunded status, he said.
It was "not anything against BEA," Mr. Sartor said.
Officials for Roanoke College's $45 million endowment chose to move to Zesiger Capital because they were pleased with the service they were getting from Mr. Zesiger, said Richard Hemberger, vice president-business affairs.
Mr. Zesiger said he formed Zesiger Capital because he prefers to operate in a smaller, individualized business, which is what BEA was like when it was formed. (BEA managed about $21 billion as of the end of last year).
He said his firm's executives manage money the same way he did at BEA, using an "aggressive balanced" strategy. He said he invests in a variety of publicly and privately traded securities, seeking higher-than-market returns, with comparable or lower volatility.
For example, Mr. Zesiger said he may buy private debt from both public and private companies, emerging market securities and high yield debt. He said private investments generally will not be more than 15% of a portfolio, while foreign securities will not be more than 20%.
He said he thinks the firm adds value mostly through asset allocation, although security selection also plays a role. The firm has six portfolio managers - one of which came from BEA - and 21 employees in total, he said.
In addition, the firm is looking to hire one domestic and one foreign portfolio manager. He said the firm manages assets for institutions and high-net-worth individuals and offer clients investment through commingled funds or private investment partnerships.
Mr. Zesiger said he doesn't use derivatives for asset allocation, or anything else. Derivatives fall under hedging - "in my experience, hedging costs money," he said.
"Instead of hedging, I try to diversify," he said.