Mellon Capital Management Corp.'s 46% growth in assets under management during the past 2½ years has helped the firm move further away from the dark days of the financial crisis.
Net inflows of $41 billion from institutional investors increasingly moving into index strategies have fueled the asset growth, as have $63.6 billion from market returns, said Gabriela Franco Parcella, CEO and chairwoman of the San Francisco firm.
Assets under management went into a freefall during the financial crisis: Its AUM of $139.5 billion on Sept. 30, 2008, was down almost 40% from a year earlier, according to data from eVestment LLC, Marietta, Ga.
When Ms. Parcella took over in March 2011, assets had risen to $229 billion, and the $333.9 billion as of Sept. 30, 2013, was the highest in the firm's 30-year history at that point. (Assets have increased further to $349.4 billion as of Oct. 31.)
“It's huge and really exciting for Mellon Capital,” Ms. Parcella said in a recent interview.
But assets in Mellon Capital's higher-fee businesses, such as hedge funds and absolute-return strategies, are still significantly below their pre-crisis asset levels, according to sources and eVestment data.
Mellon Capital's asset are key for its parent, Bank of New York Mellon Corp. Mellon Capital has the second-largest asset base of the 16 boutique money managers owned by BNY Mellon and is one of the top revenue generators among the money management group, said sources with knowledge of the company's operations.
But those sources say senior management at BNY Mellon has been concerned about Mellon Capital's ability grow its higher-fee alternatives business. Nearly 90% of the firm's assets are in passive strategies, with $33 billion in higher-fee active strategies such as hedge funds, absolute-return and asset allocation strategies, company data show.
A flagship Mellon Capital active multiasset institutional strategy, the Global Alpha Strategy, reported assets of $35.4 billion as of Sept. 30, 2007, according to eVestment. Six years later, the strategy had assets of $10 billion and is still experiencing outflows, eVestment numbers show.
Several sources said Mellon Capital's high-fee hedge fund business also has seen a decline. Assets are about $2.5 billion currently, down by more than half since before the financial crisis, they said.