Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Print
June 25, 2007 01:00 AM

Marsico move seen as setback to BoA’s strategy

By Douglas Appell
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    BOSTON — Thomas F. Marsico’s decision to buy back his fast-growing firm from Bank of America Corp. sets back the bank’s goal of boosting the contribution asset management makes to its bottom line. Industry watchers say it remains unclear whether BoA’s main money management arm, Columbia Management Group, can fill the gap.

    In an interview, Keith T. Banks, Columbia’s chief executive officer and president, said the sharp improvement in the performance of Columbia’s equity strategies in recent years is poised to provide “significant organic growth opportunities” for the bank. Moreover, with its “traditional” house now in order, Columbia is beginning to develop the alternatives strategies investors increasingly crave, he said.

    Those opportunities would have to be significant to make up for the departure of Denver-based Marsico Capital Management LLC, whose assets under management surged from $4.7 billion in February 1999, when BoA bought its first stake in the firm, to $94 billion now, despite a vicious bear market for growth equity investors like Marsico.

    Marsico has pulled in institutional accounts, as well as being Columbia’s biggest magnet for retail money. Marsico will continue to subadvise roughly $35 billion for Columbia.

    Terms of the deal weren’t disclosed; investment bankers estimated a price tag of at least $2.5 billion based on standard multiples of assets under management or revenue.

    How big of a blow the deal is to BoA’s money management ambitions isn’t certain.

    One investor in money management firms, who declined to be named, said, “I think they’re in major hot water” and should be looking to get out of manufacturing altogether.

    Others, however, say the independence Marsico jealously guarded from the moment it became a part of BoA will minimize any disruption.

    “There comes a certain size, a certain time in a money manager’s (existence) where the asylum is not just run by the inmates, it’s owned by the inmates,” said Donald H. Putnam, managing partner of New York-based investment bank Grail Partners.

    “From an earnings perspective, it will be disappointing for Bank of America, but since (Marsico) always operated as a stand-alone entity, the impact on the broader asset management business will be much less severe,” said one investment banker.

    BoA executives remain committed to boosting asset management’s contribution to the bank’s bottom line, Mr. Banks said. BoA doesn’t disclose that number, but experts figure it’s well under 5% of the bank’s net income.

    Meanwhile, the continued industry march toward open architecture — distributors tapping best-of-breed money managers to sub-advise their funds — will force more big financial conglomerates to re-evaluate running their own manufacturing, observers said. That has left a lot of banks grappling with the pros and cons of partial sales of their money management units, noted Benjamin Phillips, a managing director and head of strategy with New York-based investment bank Putnam Lovell NBF Securities.

    The Marsico buyback must have prompted a bevy of private equity investors to call other BoA units — such as Chicago-based Columbia Wanger Asset Management LP — to see if they were similarly disposed. But one investment banker said the recent retirement of founder Ralph Wanger makes it tougher to compare the two situations. Chuck McQuaid, chief investment officer of Columbia Wanger, referred all questions back to Bank of America.

    Fully integrated

    Columbia’s Mr. Banks said that unlike Marsico, the Wanger unit is fully integrated into Columbia Management. Marsico was “a one-off,” and people looking to “connect the dots” to Wanger are off base, he said.

    Market watchers say Columbia’s broader asset management operations have improved markedly in recent years. Colin Moore, brought in four years ago to revive Columbia’s equity performance, has made considerable progress, giving Columbia sharply improved three-year results for a wide range of key strategies, Mr. Banks said.

    Todd Trubey, an analyst with Morningstar Inc., Chicago, said although there’s room for further improvement, Mr. Moore’s system “gives talented investors room to work.” Lipper Inc. said 62% of Columbia’s 52 non-Marsico mutual funds posted above-median returns for the 12 months through mid-June, with 68% and 66% outperforming on a two- and three-year basis, respectively.

    But one industry watcher familiar with Columbia, who declined to be named, said other firms have been busy developing sought-after alternative investment strategies while Columbia was working to rejuvenate its traditional strategies.

    Mr. Banks conceded the point. “Before we started going down the alternatives path, we had to make sure our traditional path was in order,” he said. Columbia has largely succeeded on the traditional side, and now it is focusing on alternatives as well — bringing out its first multistrategy hedge fund offering at the end of last year, and funding its first long-short strategy.

    Related Articles
    Marsico restructures buyout debt
    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference