NEW YORK - Lombard Odier Inc. has started the year with a bang, pulling in about $400 million from five new benefit plan mandates in the first quarter.
The new accounts are:
* The Ohio Bureau of Workers' Compensation, Columbus, for $200 million in international large-cap growth equities;
* The National Elevator Industry Benefit Plans, Newtown Square, Pa., $70 million, European large-cap growth;
* The Celanese American Corp. pension fund, Summit, N.J., $70 million, international large-cap growth;
* Springs Industries Inc. pension fund Fort Mill, S.C., $25 million, international large-cap growth; and
* The Export Development Corp., Ottawa, Ontario, C$20 million, (US$12.7 million) international large-cap growth equities.
In addition the firm, which is the U.S. unit of Lombard Odier et Cie of Geneva, was hired to be a subadviser to an international mutual fund sponsored by AssetMark, Pleasant Hill, Calif., and to manage wrap accounts for the firm, which could lead to $100 million in new assets for the firm.
Lombard was finalizing two more mandates as the second quarter began. Both were from corporate pension funds based in Pennsylvania. One was for $90 million and the other for $30 million in international large-cap growth equities.
Gieger gets credit
Joseph Gieger, managing director and national sales director for the firm, which has $3.5 billion in assets from U.S. institutional investors, is given a lot of credit for the recent success.
"They have a heck of a salesman in New York In Joe Gieger," said David Fialkowski, a consultant with Capital Resource Advisors, Chicago. "He's well-connected and diligent and keeps them in front of you. The challenge with several hundred products out there is to keep your name in front of people and he's very good at doing that."
Mr. Gieger said Lombard's goal is to have 15% to 20% growth in assets per year, adding between $500 million and $700 million in new money.
The firm specializes in international large-capitalization equity portfolios with what Mr. Gieger describes as "a growth bias and a country sector approach."
"We think if you can identify companies with growing earnings, it will equate to added long-term share value," he said.
The firm's performance has topped the benchmarks. For accounts benchmarked to the Morgan Stanley Capital International Europe Australasia Far East growth index, Lombard's portfolio returned an annualized 8.2% for the three years ended Dec. 31 vs. a 6.1% return for the index, and an annualized 8.8% for the five years vs. a 4.8% return for the index, according to Lombard's data.
Lombard's EAFE-plus portfolio, a more concentrated portfolio that has a higher risk level and is expected to produce higher returns, had an annualized 19.6% return for the three-year period ended Dec. 31. That portfolio also is benchmarked to the EAFE growth index. And the firm's Europe-only strategy had an annualized 14.5% for the three-year period, vs. a return of 8.4% for the MSCI Europe growth index. For the five years, the Europe-only portfolio returned an annualized 18.4% vs. 13.1% for the MSCI Europe growth index.
Five global sectors
There are five global sectors in which the firm invests its international mandates: health care, technology, finance, industrial companies and consumer goods. The parent company has boards of industry experts who advise the firm on developments in each sector.
"Each of our international sector funds has a corresponding advisory board that meets quarterly," said Mr. Gieger. "They provide research to the firm and are paid according to how well each fund performs."
Most of the firm's investments are in developed markets, with "opportunistic" investments in emerging markets of around 10% for most mandates, he said. However, National Elevator's mandate allows Lombard to invest up to 20% in emerging markets.
"We hired them specifically for a European mandate," said James Walker, co-chairman of the $3.8 billion National Elevator benefit plans. "We were satisfied with their process and performance."
Springs Industries got acquainted with Lombard through its consultant, BARRA RogersCasey. "They give us a list of managers and we do the interviews," said Karen Edwards, cash and investment manager for the $798 million pension fund.
With the Ohio Bureau of Workers' Compensation, Lombard was one of 87 firms that responded to an RFP for international managers. "We were looking for larger firms with significant amounts of equity assets and a portfolio management team in place for at least five years," said Bob Cowman, chief investment officer of the $17 billion fund. "We looked at historical performance to see how the firm and the process had done."