SAN DIEGO — Brandes Investment Partners LP, a firm best known for equity management, is on a quest to bulk up its fixed-income business.
The San Diego firm is trumpeting four domestic fixed-income offerings as part of a major push to expand beyond its $109 billion, capacity-constrained equity business.
"In the U.S., (fixed income) is undoubtedly the big effort," said Barry Gillman, director of portfolio strategies.
That might seem counter-intuitive to pension fund executives who are reducing bond allocations because they think the flat yield curve makes it hard to find opportunities in fixed income. But Brandes doesn't think that will be a problem, Mr. Gillman said.
All but one of the privately owned firm's 15 equity strategies has closed to new investors. While some of those strategies are underperforming, rough patches are not unusual for deep value investors, said Soonyong Park, director of manager research at CRA RogersCasey, an investment consulting firm in Darien, Conn.
Brandes adheres to a Graham and Dodd value-investing approach. The firm buys out-of-favor securities trading at discounts to their intrinsic value and holds them until their true worth is realized.
The same bottom-up investing style has been applied to Brandes' fixed-income offerings. Brandes acquired Hilltop Capital Management, a Milwaukee fixed-income shop, in 1999 and changed the name to Brandes Fixed Income Partners Inc. BFIP became Brandes Fixed Income Group in June 2002.
Brandes' bond strategies had $345 million in combined total assets as of Sept. 30, most of which is seed money from Brandes' partners. However, the firm is "in negotiations" with one European pension fund and recently struck a deal with The Charles Schwab Corp., San Francisco, to make Brandes' fixed-income separately managed account available to the retail market, Mr. Gillman said. Discussions are under way to include Brandes' offerings on other retail platforms. Mr. Gillman declined to provide specifics.