BOSTON - Boston Co. Asset Management is recouping assets and adding management to replace what it lost when 33 staffers left to form Boston Partners Asset Management last April.
BCAM executives are concentrating on maintaining their value investing discipline and building assets, while leaving behind the events of last spring, said Alexander "Toby" Webb III, vice chairman and chief investment officer.
The firm lost $11 billion in assets just during the two months following Boston Partners opening, taking its assets from $26 billion at the end of April to $15 billion by June 30.
Assets continued to drop, but have since stabilized at $13.5 billion and the firm has begun to gain new business.
The money that left included $2 billion from Smith Barney mutual funds; the rest was mainly large public pension funds.
On the other hand, BCAM brought in $456 million in new business from nine new clients during the third quarter, and more than $1 billion in new business during the first month of the fourth quarter.
And, Mr. Webb noted about 70% of the clients didn't withdraw their assets when the big group left.
"The investment management and process didn't leave, regardless of what people say," said Mr. Webb.
He said only one fixed-income professional left with the group that started Boston Partners, plus many of the BCAM's analysts are still there and the firm has added more.
"People are really excited about being here," said Mr. Webb. "The culture here is very focused on growth."
BCAM is rebuilding top management as well. Mr. Webb, formerly president and CIO of Fidelity Management Trust Co., Boston, replaced Desmond Heathwood. And last November, Francis D. Antin joined BCAM to replace Michael Jones as vice chairman and chief operating officer. Mr. Antin, formerly director of marketing and product development at State Street Bank & Trust Co., will be responsible for all sales and marketing functions, as well as finance and operations activities.
The turmoil last spring "created a near-term obsession with results," said Mr. Webb. Fortunately, returns have been mostly ahead of the market, he added.
BCAM's equity composite returned 32.4% for the first nine months of 1995, while the Standard & Poor's 500 Stock Index returned 29.77% during the same period; its small-capitalization strategy returned 26.39%, vs. 25.72% for the Russell 2000 index; and the international equity product returned 12.51% vs. a 6.9% return for the Morgan Stanley Capital International Europe Australasia Far East index.
For the third quarter, the equity composite returned 9.58%, compared to 7.95% for the S&P 500; small cap returned 10.45, compared to 9.88% for the Russell 2000; and international equity returned 3.09%, compared to 4.22% for the EAFE index.
Fixed-income products also are ahead of their benchmarks.
The core bond product returned 1.99% for the third quarter, compared to a 1.96% return for the Lehman Brothers Aggregate index; the core bond plus product returned 2.09% compared with a 1.91% return for the Lehman Brothers Government/Corporate index.
The intermediate bond product returned 1.69%, compared to a 1.66% return for the Lehman Brothers Intermediate Government/Corporate index.
Its small-cap strategy, which has about $600 million under management, will be capped at $750 million by year end, Mr. Webb said.
BCAM is continuing its value orientation, he said. The firm uses a typical value discipline, marrying quantitative management techniques with fundamental research. In fixed income, the firm uses a neutral duration, interest-rate neutral strategy using government and mortgage-backed securities.
"We're going to be focusing on solid investment management across all product lines," said Mr. Webb "You can't get to the party without good numbers."