Commerzbank Aktiengesellschaft reached agreement to acquire Montgomery Asset Management from Montgomery Securities.
Terms were not disclosed.
MAM has approximately $8 billion in U.S. growth, emerging markets and international equity assets, including the 19-fund Montgomery Funds family.
The firm will retain its name and become an independent U.S. affiliate of Commerzbank Asset Management, the bank's money management subsidiary, said R. Stephen Doyle, chairman and CEO of Montgomery Asset.
Management retained a minority stake in the firm and all portfolio managers and executives have made long-term commitments.
The St. Louis Police Retirement System will be performing a complete manager review, concluding with searches, a spokesman for the $560 million fund said.
The move follows the termination of Boatmen's Trust, which had managed $268 million in fixed-income and balanced portfolios. Boatmen's was terminated when portfolio managers responsible for the fund's portfolio left to form Rockwood Capital Management.
SEI will assist with the review and searches, the spokesman said. Existing managers Mississippi Valley Advisors and Commerce Bank will oversee the assets temporarily .
Boatmen's will continue as custodian pending a decision by parent NationsBank on the buyer of Boatmen's custodial assets, the spokesman said.
Massachusetts Bay Transportation Authority Retirement Fund, Boston, terminated Towle Associates and Clemente Capital. Both managed non-U.S. equity portfolios of $6 million each. The money was split evenly between existing international managers Seligman Henderson and Morgan Stanley; each now has $32 million from the $1.4 billion MBTA fund.
MBTA also committed an additional $19 million to venture capital and another $17.5 million to real estate. For venture capital, the fund committed $4 million each to two Weiss Peck & Greer funds. WPG now has $16 million from the MBTA fund. The fund also gave another $5 million to Investment Advisers, bringing that total to $8 million; New England Growth Fund got $3 million, bringing its total to $5 million; and Dominion Ventures received another $3 million, lifting its total to $5 million.
For real estate, existing managers Equitable Real Estate and TA Realty received additional allocations of $10 million and $7.5 million respectively. Equitable now runs $40 million for the fund, while TA manages $29 million.
Massachusetts Pension Reserves Investment Management Board, Boston, issued an RFP for a consultant. Its contract with incumbent Wilshire expires in June; the firm is expected to apply. The $18 billion board also was expected to reduce the number of bond managers today, but Executive Director Greg White said he would not disclose details until managers were notified.
Only the largest full-service mutual fund companies stand a chance of success, a study by Federal Reserve economists Phillip Mack and Sean Collins says. The study found that full-service vendors reach economies of scale with more than $20 billion, based on analysis of data from Lipper Analytical on 621 U.S. mutual fund complexes. For mutual fund families concentrating on single asset classes, economies of scale can be reached at about $4 billion for bonds, $10 billion for money market funds and $800 million for equities. But with better possibilities for the outsourcing of fund administration and distribution services now, smaller managers may be able to eke out a living on less, the study said.
The study also found the largest fund companies, with an average of $85 billion under management, had average annual expense ratios of 0.7%. The smallest companies, with an average of about $33 million, had expense ratios of 2.8%. The average annual expense ratio of all 621 companies was about 1.5% and the average asset pool size was $3 billion.
