Rainier executives concede their smidcap strategy has been their trump card, but they insist the firm is not a one-trick pony. The "very good results" Rainier's flagship products enjoyed in 2005 helped drive assets flows, but the firm also benefited from its five-year strategic plan to add "sales firepower" across a range of investment channels, said J. Glenn Haber, Rainier's president, in a telephone interview.
As part of that buildup, Rainier announced in September the hiring of Len Brennan, a veteran of Russell Investment Group, Tacoma, Wash., as a principal and chief operating officer, in charge of sales and client services as well as investment and business operations.
In a telephone interview, Mr. Brennan said Rainier's smidcap product has increased the firm's "visibility and exposure to the point where we are seeing a lot of activity in terms of consultants and prospects looking at the breadth of our product range." And when they look, they're seeing strong results being delivered across the board, he said.
Rainier's core equity strategy and a few newer strategies should give the firm the "opportunity to accelerate" the past year's growth, Mr. Brennan said.
Some consultants said Rainier's core strategy hews too closely to its Russell 1000 benchmark to excite clients looking for alpha. They're "not going to get too far out on a limb," said Mr. Ayers.
Rainier executives said the fact that their core strategy delivered a 12% return in 2005, roughly double the benchmark, is proof that their portfolio managers aren't closet indexers. CIO James R. Margard, in a telephone interview, said stock selection accounts for the bulk of the strategy's outperformance, and "the truth is, there are significant deviations (from the index) in what we hold."
For example, the core equity portfolio's 1% stake in Joy Global Inc., a company that recently came of out bankruptcy, as well as holdings in Mexican companies America Movil SA de CV and Cemex SA de CV, accounted for a healthy slice of the strategy's outperformance last year, he said. The strategy has begun to see "a lot of interest from consultants," Mr. Brennan said.