RhumbLine Advisers has been on a winning streak.
The Boston-based manager has won several mandates from pension funds in recent months, due to investors' continuing move to passive strategies and the firm's range of smart beta, ESG, infrastructure and other passive offerings.
“I think what you've seen is nothing more than the trend toward passive being firmly in place,” said Wayne T. Owen, CEO and general partner of RhumbLine Advisers, in a phone interview. “We've been in the right place and providing the right products.”
Troy Brown, executive director and senior consultant at the investment consulting firm AndCo Consulting, said “investors are moving away from active management in droves,” and suggested, “if the client does not have a global custodian that offers captive index products or they are not comfortable with a mutual fund, RhumbLine offers a viable solution.”
RhumbLine had $41.2 billion in assets under management as of Dec. 31, up 27.2% from the year before.
Since September, RhumbLine has pulled in more than $685 million in new accounts.
Most recently, Philadelphia Board of Pensions and Retirement hired RhumbLine to run a $75 million passive infrastructure mandate and to manage still-to-be-determined passive midcap and passive small-cap domestic equity portfolios.
The $5.3 billion pension plan also reallocated $388 million in fixed-income assets to an existing passive portfolio managed by RhumbLine, bringing that portfolio to $510 million.
Christopher R. DiFusco, chief investment officer for the Philadelphia Board of Pensions, explained in an email that RhumbLine was selected because it was “the low-cost respondent for each of the RFPs,” and because “the board has received quality service from them on other passively managed products.”
Other hires Pensions & Investments has recorded since September include:
- Indiana Public Retirement System, Indianapolis, selected RhumbLine to manage a $136 million passive domestic small-cap value equities strategy on behalf of the $28.4 billion state plan;
- Miami Beach (Fla.) Firefighters' & Police Officers' Pension Plan to manage a $43 million passive domestic large-cap value equity portfolio for the $787 million plan;
- Massachusetts Water Resource Authority Employees' Retirement System, Chelsea, to manage up to $16 million in a passive Treasury inflation-protected securities index fund on behalf of the $442 million system;
- Haverhill (Mass.) Retirement System to run $15.5 million in a passive domestic midcap core equity mandate for the $173 million system; and
- West Palm Beach (Fla.) Police Pension Fund for an $11 million passive domestic midcap growth equity portfolio for the $266 million pension fund.
“We evaluated RhumbLine's staff, investment processes, use of technology and cost. Upon careful review of these factors and others, it was determined that RhumbLine was the best option to manage our passive U.S. public equity exposure,” said Jalissa Hills, spokeswoman for the Indiana Public Retirement System.
In addition to providing the right offerings at the right time, RhumbLine is also providing customized indexing, for which Mr. Owen is seeing an uptick in popularity among investors.
“A lot of our clients want to put screens — including (socially responsible investing), fossil-fuel free — and that's been a steady business for us as well,” Mr. Owen said.
The firm has invested aggressively in its infrastructure to maximize efficiencies and capacity, reducing the need to add staff, said RhumbLine spokeswoman Melissa Martocchio. However, in the past five years, the company has added five individuals to the team: two in operations, one software developer, one in marketing and client services, and one portfolio manager.
Looking forward, Mr. Owen said the company is planning to continue in the direction it's been going and not try anything too fancy or drastic.
“We're staying in the passive space. 100% of our revenue is on the index side. We're going to continue to offer customization, and continue to offer cost-effective indexing,” Mr. Owen said. “We think that will reward us.”