NEW YORK -- Beatrice Philippe is looking to increase the $800 million in international equities her firm, Philippe Investment Management Inc., runs. But she recently decided to part ways with her brother and longtime partner, Alain, and says the move will help her meet that goal.
In an interview, she explained Philippe Investment Management's renewed direction.
The split, which officially occurred Oct. 1, was "amicable," said Ms. Philippe, one of the firm's two managing directors.
But the difference between her and brother Alain was clear, she said. Growing the business would mean cultivating more relationships with institutional investors and pension funds. Ms. Philippe, not her brother, wanted that challenge.
This fall, Mr. Philippe bought the greater portion of his sister's position in the mutual fund business, and Ms. Philippe bought out her brother in the asset management business.
"We agreed to disagree," she said.
Her brother kept the mutual fund side of the business, the Luxembourg-based Pan Holding, and the Paris-based CIPEC. Pan Holding has managed family money since 1931.
Ms. Philippe's family has been running funds since 1931. Since then, they have operated a handful of funds for both individual and institutional investor on both the continent and New York, she said. Philippe Investment Management got up and running in 1982.
At the end of December, she was in the middle of a series of visits to consultants and clients, she said.
And Ms. Philippe, the largest single shareholder in the asset management business, believes the timing of the split is right. She believes, the roiling markets of 1998 call for active management.
"We love it when markets are choppy," she said. "That's when active managers can add value."
She clearly looks at the zigzag of many global markets as an opportunity. "With difficult markets, plan sponsors will look at numbers and plan to reshuffle. We hope to gain some accounts."
She also believes the split works to her advantage because it "has helped clear up the (question of) how committed we are to pension fund markets."
To gain more institutional business, Philippe Asset Management "needed more effort on the marketing side."
Her grandfather, Raymond Philippe, started the firm in Luxembourg in 1931. He invested the family's money as well as creating one of the first closed-end funds, she said. The firm managing that fund evolved into Pan Holding a few years later. Her father, Pierre, started another mutual fund firm, CIPEC, in Paris in 1961.
She believes the firm's presence on the Continent distinguishes it from other active international money managers. "We're one of the few independent firms in Paris. A lot of firms are British."
The firm, which has $800 million under management, also offers "tremendous continuity" despite the recent split, she said.
She joined the firm as an analyst in 1974 and worked under the tutelage of her father, who died in 1986. Her partner, Managing Director Michel Raud, who is in charge of the Paris office, has been with Philippe for 10 years.
Philippe Investment Management got off the ground in 1982 as a joint venture, Wortheim Phil- ippe International. The Philippes bought out Wortheim 10 years ago.
North American pension fund clients include the Public Employees' Retirement Association of Colorado, with an EAFE mandate; Ontario Municipal Employees' Retirement System, with a Europe-only account; and Municipal Fire & Police Retirement Association of Iowa, which has a European portfolio with a small-cap bias.
The split occurred Oct. 1. She bought her brother out of Philippe, and he bought her out of the mutual funds, where she remains a director. "He wanted to focus on family funds. Managing funds for institutions is pretty stressful." They have an agreement to share the 11 analysts and three research assistants until March 2000. The staff then officially becomes hers.
She has been busy since the split. She spent most of October in Paris making sure operations ran smoothly. Then she met with a number of consultants in November and December, including Frank Russell Co., Watson Wyatt Investment Consulting, LCG Associates Inc. and others.
She added one analyst on staff last year, but is confident she is fully staffed to run $2 billion vs. the current $800 million. She believes keeping the firm growing is the only way to keep the best people on staff.
Since she moved to New York to work alongside her father 25 years ago, she has considered New York her home. She says she spends about a week each month in Paris.
If she can't build Philippe Investment Management alone, she will look for a partner in a couple of years, she said.
Philippe Investment Management's style combines a long-term value outlook with top-down, and bottom-up research, she says. For the year through Nov. 30, the firm had outperformed the EAFE index by about 300 basis points.
Mother of two and step mom of three, she says her children some day may join the family business as she and her brother did and their father before. But she puts no undue pressure on them to follow their elders' footsteps. For now, she says, she is simply "trying to continue the family tradition."