SANTA MONICA, Calif. — Wilshire Funds Management officials want the institutional fund manager to become a household name.
The asset management arm of Wilshire Associates Inc. plans to introduce two mutual fund offerings — a 130/30 fund and a target maturity fund — both branded under the Wilshire name. This is a departure for the firm, which has 90% of its $23.5 billion in assets managed under private labels.
There is a push within the firm to offer more investment products under the Wilshire name, particularly with mutual funds that offer absolute-return type strategies, said Lawrence E. Davanzo, senior managing director at the Santa Monica-based firm.
Wilshire Associates has evolved from a pure consulting firm to an investment manager in the retail and institutional markets. To date, about 10% of the funds management group’s assets under management are branded under the Wilshire name in the form of mutual funds or variable insurance trusts. “The target is significantly over 10%,” said Mr. Davanzo, declining to give a more specific goal. As of Dec. 31, some $20.7 billion of the firm’s assets under management came from institutional clients, with the rest from the retail and high-net-worth markets.
Sold through intermediaries
Like all assets under the funds management group, the new funds will be sold through financial intermediaries such as insurance companies or registered investment advisers. Its distributors include Janus Capital Group, Denver; Lincoln Financial Group, Philadelphia; AGF, Toronto; and Standard Life Investments Ltd., Edinburgh.
For the new mutual funds, Wilshire will tap managers it has already been tracking through its manager research group.
Wilshire expects to launch the 130/30 fund in the third quarter, although some details — such as a fee structure or exactly which managers will be pooled in the offering — has yet to be determined. The funds will offer both institutional and retail sales.
A 130/30 manager is typically allowed to go long up to 130% of a mandate and short up to 30%. A slew of investment vehicles have come onto the marketplace in recent months but have been limited mainly to offerings for institutional investors.
“Most of these strategies have mainly been for ultra-high-net-worth or institutional investors, and the retail investor has not had access,” Mr. Davanzo said. “So (retail investors) are looking for ways to get returns in a low-return environment.”
The target maturity fund is still in its nascent stage but will eventually take an investor beyond his or her retirement date and manage assets in the post-retirement stage, said Mr. Davanzo. It will likely include allocations to exchange-traded funds.
The funds management group already offers five mutual funds under the Wilshire name — Dow Jones Wilshire 5000 index, small-cap value, small-cap growth, large-cap value and large cap-growth. All funds offer retail and institutional share classes.
But one industry executive questions if there is room to grow a retail business in an already saturated environment. Beyond that, “in the case of mutual funds, being able to short is already being used, and 130/30 is easily replicable,” said the executive, who requested anonymity.
Retail help
The growth of Wilshire’s indexes is likely to help its efforts in the retail sector, where name recognition has greater pull than with institutional clients. The firm created the Dow Jones Wilshire 5000 index in 1974 but has spent the past five years making a concerted effort to market the brand, said spokeswoman Kim Shepherd.
In the nearly two and a half years since Mr. Davanzo has rejoined the firm — he founded Wilshire’s consulting unit in 1980 but left in 1991 — the funds management group’s assets under management have grown to $20 billion from $7 billion. Most of that came from asset allocation funds in the long-only sector, along with single asset class multimanager portfolios sold to financial intermediaries.
Wilshire is not the first consulting firm to move to the money management side.
Russell Investment Group, Tacoma, Wash., began consulting to pension funds in 1969 and by 1980 had landed in the investment management industry.
Unlike Wilshire, the Russell indexes were created after the firm had already entered the money management business. Still, the indexes help boost the firm’s $200 billion commingled and manager-of-managers funds, said David Grieger, chief marketing officer at Russell.
“Indirectly, it helps,” said Mr. Grieger, of the indexes. “It depends on the audience. If you’re in the industry, people know us as an investment shop. On the retail side, that’s where the index comes in,” he said.
