For Nvest, another new name and ambitious goals

The rock ‘n’ roll artist may want to be known as Prince once again, but the company formerly known as Nvest is getting ready to present a new persona.

Now that CDC Ixis Asset Management’s $2.2 billion acquisition of Nvest Cos. LP is complete, the Paris company is drawing up plans to pump new life into the Boston holding company with 12 asset management operations.

Nvest, which changed its name last month to CDC Ixis Asset Management North America LP, has been hampered in recent years by lackluster investment performance and asset outflows.

But the money management arm of Caisse des Depots Group, the French financial services company, has big plans for its new North American unit. The company intends to begin selling mutual funds managed by its U.S. affiliates to European investors in the second quarter.

CDC Ixis is also planning to peddle its European stock-picking prowess to U.S. institutional investors.

That’s not all. Calling 2001 “the year of the product,” Nvest Funds – which uses eight of the 12 affiliates as subadvisers – will launch three stock funds this month, bringing to 26 the number sold by the group.

In May, Nvest Funds, which runs $7 billion in assets, will become CDC Nvest Funds. “We want to compete with the largest global asset gatherers,” says Gilles Guerin, co-president of CDC Ixis Asset Management Associates, the institutional marketing group for CDC Ixis Asset Management North America.

The flurry of activity has been a long time coming for the U.S. holding company, whose affiliates include such highly regarded companies as Loomis Sayles & Co. LP of Boston; Chicago’s Harris Associates, which runs the Oakmark funds; and Westpeak Investment Advisors in Boulder, Colo. The popular Kobrick Funds in Boston also are part of the group.

In recent years, the company formerly known as Nvest has been an underdog. Much of its troubles stem from favoring value companies. Until recently, Wall Street has been gaga over large-cap growth companies.

But it has also been a poor performer relative to its peers. For example, the Nvest Growth fund (actually a value fund) lost 4.6% last year, while the average large-cap value fund gained 5.4%.

The $1.4 billion fund, managed by an industry star, G. Kenneth Heebner at Capital Growth Management in Boston, posted outflows of $66 million in the fourth quarter.

a big drain

All told, the company bled nearly $1.9 billion in long-term mutual fund assets, according to Financial Research Corp. While that’s not good, it beats the $4.4 billion Nvest lost in 1999.

Predictably, value-oriented Oakmark funds are responsible for much of the improvement. They had inflows of $241.6 million during the fourth quarter versus outflows of $1.6 billion in the 1999 period, according to FRC.

The company may also have been held back by its ownership structure. Until CDC Ixis stepped into the picture, New York insurer MetLife Inc. owned 48% of the publicly traded Nvest. But the insurer, which acquired the stake in what was then known as New England Investment Cos. when it merged with New England Financial in 1996, wasn’t able to harness the fund firm’s full potential, in part because it wasn’t a wholly owned subsidiary, observers say.

MetLife’s loyalties may have been divided between Nvest and State Street Research and Management Inc., a Boston money manager 100% owned by the insurer.

Now the Boston holding company is at a crossroads. If CDC Ixis is successful, at least some of the U.S.-based affiliates will truly become global players.

Among affiliates that CDC Ixis has identified as having the greatest appeal to European investors is Loomis Sayles. Credit analysis and corporate trading skills are becoming increasingly important in Europe, where the advent of a common currency has made it difficult for bond managers to distinguish themselves.

Other affiliates getting ready to take their show on the road include Harris Associates, Westpeak and Houston’s Vaughan Nelson Scarborough & McCullough.

CDC Ixis is creating six non-U.S. funds – two value funds, plus large-cap growth, core equity, growth-and-income and technology funds – to be managed by Loomis Sayles, Harris Associates and Vaughan Nelson.

The French money management company, working in conjunction with its U.S. arm, also plans to launch six global sector funds to feed a general global fund.