Four years ago, James "Jim" C. Robinson was named chairman and chief executive officer of Munder Capital Management, Birmingham, Mich. Mr. Robinson spent most of his career at Munder, joining the firm in 1987, two years after it was founded. Mr. Robinson was its sixth employee and the sole person working in fixed income his first six years. Gradually he built a fixed-income team and rose to become chief investment officer for fixed income as well as director of portfolio management. His promotion to CEO came at a period of turmoil for the company: founder Lee Munder had resigned. Recently P&I reporter Ricki Fulman interviewed Mr. Robinson about his accomplishments since moving into the corner office, and his goals for the firm.
A clean, tight ship
A At the time I was promoted, Comerica was concerned about our poor investment performance. After my predecessors were let go, we lost a ton of institutional clients — around $1.5 billion in assets. They said it was because of the management/organizational changes. Gene Miller from the bank and I flew around the country and met with each of the 20 clients who terminated us. Most of them knew me from running fixed income and believed the bank would screw things up. They took a wait-and-see approach after we met with them. They have all come back, but that took several years. First the money came back in fixed. Then more began to hire us for equity mandates. It's harder to persuade clients to come back than it is to get new ones, but once one gives you the seal of approval, others will consider you again.
A To be sure the products delivered to our clients are the ones they hired us to deliver, that they're suitable for the clients and that they outperform. It sounds simple, but that wasn't always the case.
A We had dismal equity performance on the institutional side when I became CEO four years ago, so we changed the way we did things. At the core our guys were good stock pickers, but maybe not so good at portfolio construction. After reviewing what they'd been doing, we came to believe that stock selection is key. We decided that the (portfolio managers) should focus on their core skill of stock selection and neutralize everything else. When it came to sector and industry weightings, they needed to view the market benchmark. So now the portfolio managers just pick the stocks. We gave them software to help them figure out the weightings, and it's made a huge difference in the performance of all of our products. We also moved to relative performance and no longer equal weight stocks, which has also helped enormously.
One of the less popular things I did was to hire several lawyers and add to accounting, operations and IT, because we needed to invest in the infrastructure. Even though the market was going down at that point, at the beginning of 2000, it was necessary to add people in those areas. Today, it's appreciated because we're a clean, tight ship.
A We went through all our funds to decide if there was an audience for each, if they filled an investor need. In some cases where there was some duplication, we combined them. For example, we combined the growth and income fund with a value fund, and a healthcare fund with a biotech fund. We also now have a system where the people on the sector teams feed ideas and names to the core managers, which is a great way to manage teams.
A We still need to get the word out that our equity funds are doing well and that the organizational changes are behind us. We're a different, smaller organization today. We're around 20% smaller now with 200 employees compared with 250 four years ago. We also need to educate the retail world that we're more than just sector funds and that we have funds for all the different categories.
An ongoing challenge is bridging the gap between our high-octane retail funds such as the NetNet fund and our conservative institutional funds, which make up 80% to 90% of our business. Because of the nature of sector funds, they can be hot or not.
A Yes. I run the currency models for the international bond fund and I'm on the team that manages the balanced fund. I never managed equities. Here we've gotten better at communication between the people managing equities and people running fixed; they now realize they have to look at the other side of the balance sheet and are doing it more.
A I'm pretty involved. I attend investment meetings, client meetings. I need to be sure I spend a lot of time with clients. I talk with consultants, line up meetings and devote a fair amount of time to getting out our message, to let people know we're a new firm and that we shouldn't be in the penalty box. I did a client tour in 2000 and asked for patience, because if people are looking for relative performance, they want to see a track record. Now we've had four years of good numbers, which wasn't the case then.
I also make it a point to tell clients to rebalance, when appropriate. I think it's the right thing to do and see it as part of my fiduciary responsibility. Doug Buckler, business manager of one client, Millwrights Union Local 1102, Detroit, last year thanked me at the Christmas party for our small-cap value fund, which went up 60% in 2003 and said he regretted not putting more money into it. But I told him that they should rebalance and take some off the table because the whole portfolio didn't go up 60%.
Maintaining the culture of the organization is also important. We have a unique culture here, confrontational in a constructive way so that we exchange ideas but don't take potshots. We want ideas challenged in a constructive way — it's sort of a devil's advocate mindset.
A Keeping market timers out of the fund complex is a challenge. There is just so much you can do, such as imposing back-end fees if people don't hold the funds a minimum number of days. But at the end of the day, if investors start skirting those rules, we need to kick them out of the funds. We've also spent a fair amount beefing up our internal compliance, adding a person in legal, another in accounting and adding two more lawyers. We're also giving education courses to employees to be sure they understand what they can and can't do. ... We encourage them to invest in our funds, but before they do, they must be cleared by the appropriate mutual fund board, and none of those boards have members from management.