BOSTON - NASL Financial Services, Boston, an affiliate of North American Security Life Insurance Co., has shifted more than $2 billion of its $6.3 billion in assets, hiring four investment managers, terminating two and reducing the mandates of two others.
The changes underscore the growing importance of subadvisory assignments to institutional money managers trying to break into retail products such as mutual funds and variable annuities.
Subadvisory assignments are attractive to firms lacking direct retail distribution because the manager treats the assignment as a single large account.
(NASL Financial, a subsidiary of the Manufacturers Life Insurance Co., administers and distributes the Venture and Venture Vision annuities, and Venture Life and North American funds. Its main focus is retail.)
The big winner in the reshuffling is T. Rowe Price Associates Inc., Baltimore, which will take over two accounts with $928.5 million; Goldman, Sachs & Co., New York, is losing two accounts, totaling $640 million, one of them to T. Rowe Price.
The changes are as follows:
-Morgan Stanley Asset Management, New York, replaces Oechsle International Advisors, Boston, for $677 million in global equity portfolios. Oechsle still manages the Venture Annuities and Venture Life global government bond portfolios.
-T. Rowe Price replaces Goldman Sachs as subadviser of $540 million in value equity portfolios and Roger Engemann Management, Pasadena, Calif., as manager of $388.5 million in growth portfolios. For value, T. Rowe Price will use a strategy similar to that of the T. Rowe Price Equity Income fund; for growth, the approach will mirror the T. Rowe Price Blue Chip Growth.
-Founders Asset Management, Denver, replaced Goldman Sachs as subadviser of the North American Funds' $100 million asset allocation portfolio. The new portfolio will mirror the Founders Balanced Fund.
-Manufacturers Adviser, an affiliate of NASL, replaces Wellington Management Co., Boston, as subadviser of $342 million in money market portfolios. Wellington still manages the Venture Annuities, Venture Life and North American Funds investment-grade bond and growth and income portfolios.
The changes are effective immediately, subject to shareholder approval.
NASL officials did not give a reason for each of the changes, but a statement from John DesPrez, president of NASL, said: "We have a fiduciary responsibility to offer our investors the best possible value and we take this responsibility very seriously. In selecting subadvisers, we have very specific criteria: We look for superior, risk-adjusted returns that are consistently above the average of its peer group and index; a consistently applied investment philosophy and discipline; continuity of professional talent and ongoing business operation; and performance that excels in good markets and provides downside protection in difficult markets."
Todd Ruppert, vice president of T. Rowe Price, said the firm's subadvisory business "has grown quite a bit in recent years due primarily to the demand for (firms with) name recognition among variable annuity providers."
Although subadvisory accounts are managed as separate portfolios, they give the added bonus of an "incremental distribution outlet for garnering more assets" whereas with a (pension fund) separate account, growth is primarily asset appreciation, he said.
was gained in the last three years, Mr. Ruppert said.
A spokesman from Goldman would not comment.