GW&K Investment Management has tripled its assets under management and more than quadrupled its institutional AUM in the almost six years since it left from under the wing of former parent company Bank of New York Mellon and became an affiliate of Affiliated Managers Group Inc.
The jump in institutional assets was driven in part by the Boston-based money manager having won European assets for the first time in its 40-year history.
“It wasn't a plan that we had conceived. We just had such outstanding investment performance on our small-cap products that we were invited to bid on some mandates in Europe,” said Thomas F.X. Powers, co-president of Boston-based GW&K, in a telephone interview.
As of May 31, GW&K had $550 million in European AUM.
“We had the expertise and AMG had the distribution, so it was a partnership that came together pretty well,” added co-president T. Williams Roberts III in the same interview.
When GW&K left BNY Mellon and joined Prides Crossing, Mass.-based AMG in October 2008, it had $6.8 billion in AUM, $929 million of which was institutional. Now, the firm manages $20.43 billion, $4 billion of which is institutional.
“We plan to grow the institutional segment of our business,” Mr. Powers said.
In addition to expanding into Europe, much of GW&K's growth is due to hiring additional institutional sales representatives. Messrs. Powers and Roberts said the firm has hired four institutional sales reps over the past three years.
All told, GW&K currently has 101 employees, compared to 79 when it first joined AMG. The firm is in the middle of hiring six additional staff members (although not all of these positions are in the institutional division).
While at BNY Mellon, its parent saw GW&K more as a domestic adviser, according to Mr. Roberts.
“BNY Mellon's plans for outside the U.S. didn't include GW&K,” Mr. Roberts added. “They were helpful in making introductions to us on the institutional front, but they never thought about us moving outside the U.S.”
This changed when the firm made the switch to AMG. With strong performance and a new set of resources provided by AMG, GW&K brought in European assets for the first time.
“We won several mandates in Europe based on our excellent performance in our small-cap strategies,” Mr. Powers said. “We also leveraged some of AMG's contacts to win further mandates.”
GW&K's small-cap core equity strategy returned 16.56% for the three years ended March 31, vs. 13.18% for its benchmark, the Russell 2000 index, according to data from Marietta, Ga.-based eVestment. The five-year return was 26.88%, vs. 24.21% for its benchmark. Its 10-year return was 11.86%, vs. 8.53% for its benchmark. All returns are annualized.
GW&K's small-cap growth equity strategy, meanwhile, returned an annualized 16.2% for the three years ended March 31, compared to 13.61% for its benchmark, the Russell 2000 Growth index. Its five-year return was an annualized 28.33%, vs. 25.24% for the index. The strategy was launched in April 2008.
Although Messers. Roberts and Powers declined to disclose which mandates they have won, they revealed that some were in Germany and in the Netherlands.
The firm is also growing physically. When GW&K renewed its lease at 222 Berkeley Streetin 2012, it took over an additional floor and expanded its lease to 34,000 square feet from 20,000 square feet. It then spent the following year renovating and modernizing the space.
“In last couple of years, it made sense to take on an additional floor and revamp the space,” Mr. Roberts said.
Looking forward, the firm expects to continue to grow its AUM both in the U.S. and Europe.
“Our plan is to continue to diversify AUM, particularly through our small-cap suite of products,” Mr. Powers said. “As far as distribution goes, we're going to continue to focus on the institutional domestic market as well as leveraging AMG's global distribution team.”
