Highland gives funds a face-lift with spinoff

Highland Capital Management LP is taking its separation of institutional and retail assets to the next level.
The firm has announced it will spin off its mutual fund arm next month into Pyxis Capital, a newly formed firm. Joe Dougherty, president of Pyxis, said the spinoff has been in the works for a few years; Highland’s mutual fund arm has been acting independently since it was formed. Pyxis, named after the Latin term for a mariner’s compass, will retain the Highland funds’ managers and subadvisers.
The timing coincides with the launch of a new website developed for the funds that will include a tool to let advisers see how the inclusion of a Pyxis fund would impact a portfolio. Pyxis also plans to add five internal wholesalers by March, giving the firm nine, there will be 26 wholesalers overall. “We’re really trying to drive home client interaction,” Mr. Dougherty said.
Pyxis’ lineup of 20 mutual funds is split evenly between traditional and alternatives strategies, but Mr. Dougherty said alternatives would be the primary focus in product development. “Our DNA is institutional alternative strategies … we can walk into any room with good conscience and talk about creative alternative strategies,” he said. With alternatives, there also is an opportunity to add value for an adviser, rather than by launching another traditional fund, like a large-cap value fund, in a mature market, Mr. Dougherty said.
Alternative mutual funds have been far more popular than traditional equity funds this year. Alternatives have had inflows of $12 billion through the end of November, according to Morningstar Inc. Investors have pulled about $66 billion out of stock funds over the same time period.
Two Pyxis alternatives funds, a natural resources fund and an alternative income fund, are in registration with the Securities and Exchange Commission and expected to launch next year. Mr. Dougherty declined to comment on them specifically while they are in the registration period.
Highland Capital will have about $20 billion in assets under management after the spin-off.