IXIS vaults onto list of top-selling fund firms

IXIS Asset Management Distributors LP, which saw its main sales channel dry up in 2000, has stemmed the tide of outflows and now ranks among the nation’s 10 best-selling mutual fund firms.
FEB 05, 2007
By  Bloomberg
BOSTON — IXIS Asset Management Distributors LP, which saw its main sales channel dry up in 2000, has stemmed the tide of outflows and now ranks among the nation’s 10 best-selling mutual fund firms. Last year, investors put $7.9 billion more into Boston-based IXIS’ stock and bond funds than they took out, according to Financial Research Corp. That is a big improvement from 2002, when investors yanked out $855 million more than they put in. In fact, last year’s net inflows accounted for more than a third of IXIS’ $22.9 billion in long-term fund assets, according to Boston-based FRC. There is a hitch, though. Loomis Sayles & Co. LP — one of 15 asset management affiliates owned by IXIS’ Paris-based parent, IXIS Asset Management Group — accounted for $8.2 billion of net inflows last year. In other words, without Loomis, IXIS’ funds still would be experiencing net outflows. “Loomis Sayles is really driving their sales,” said Lynette DeWitt, FRC’s associate director of retail investment markets. “When you speak of IXIS at this point, it’s Loomis Sayles.” Stellar bonds John Pelletier, chief operating officer at IXIS Asset Management Distributors, acknowledged that the positive net flows are due to the “exceptional performance of the fixed-income offerings from Loomis Sayles.” Most of Loomis Sayles’ contribution came from two bond funds run by the same star manager: Daniel Fuss. The Loomis Sayles Bond Fund (LSBRX) took in a net $3.84 billion, while the Loomis Sayles Strategic Income Fund (NEZYX) netted $3.78 billion, according to FRC. “Bill Gross gets a lot of ink, but I’d rather put my money at Loomis,” said Brian O’Rourke, principal at O’Rourke & Co. Inc., a Boston-based financial planning firm, in a reference to the famed bond investor, and managing director and chief investment officer, of Pacific Investment Management Co. LLC of Newport Beach, Calif. Kathleen Gaffney manages both funds with Mr. Fuss, who is 73. The lopsided contribution of those two Loomis Sayles bond funds to IXIS’ flows is a concern, Ms. DeWitt said. “That’s one of the risks that we put on them every quarter when we review,” she said. Loomis Sayles’ outsized contribution to flows shouldn’t be cause for worry, Mr. Pelletier said. Although IXIS Asset Management Distributors is not a large fund complex, it comprises 15 institutional investment managers — each with varying investment styles. Collectively, the 15 manage about $247 billion in assets domestically, most of it for big investors such as pension funds, foundations and endowments, Mr. Pelletier said. When one manager’s style goes out of favor, others’ styles are likely to be in, he said. “The key phrase is diversity,” Mr. Pelletier said. IXIS Asset Management Distributors, which refers to itself as “the name behind the names,” has come a long way from the dark days of 2002, when, according to FRC, its long-term fund assets had dwindled to $6.6 billion. In the fourth quarter of that year, the fund firm, then known as CDC Nvest Funds, took a “hard look” at its products and decided to “totally change our business model,” Mr. Pelletier said. The firm, in which New York-based MetLife Inc. had a 48% stake until October 2000, had relied primarily on selling its products through MetLife’s insurance brokers and had funds to accommodate virtually all of Chicago-based Morningstar Inc.’s style boxes. “We were a proprietary fund family until October of 2000,” Mr. Pelletier said. “When we were sold, what had been a major source of our flows suddenly dried up.” To reignite those flows, IXIS Asset Management Distributors decided to focus on the best disciplines of its institutional money management affiliates. It subsequently eliminated about 15 funds and asked Loomis Sayles — already one of the affiliates owned by its parent company — if it would consider integrating the two stand-alone fund groups. Match time “We went to our affiliate Loomis Sayles and said, ‘You have a small fund family, and we have a small fund family,’” Mr. Pelletier said. “‘Why don’t we combine them into a single complex, and we’ll be able to reduce costs for shareholders?’” That integration combined Loomis Sayles, a no-load fund group, with IXIS Advisor Funds, a load family, under the IXIS Asset Management Distributors umbrella. IXIS Advisor Funds are managed by some of the 15 affiliates, including AEW Capital Management LP and Capital Growth Management LP, both of Boston, and Harris Associates LP, the Chicago-based investment adviser to The Oakmark Funds. The 15 affiliates also have helped IXIS Asset Management Distributors build its separately managed account business, Mr. Pelletier said. That business, which had no assets in 2002, now manages $12.5 billion, he said. Some big mutual fund firms at first were reluctant to enter the separate-account business for fear separate accounts would undercut some of their higher-margin mutual fund business. “We were in a different situation, where we didn’t have business to cannibalize,” Mr. Pelletier said. “So we were happy to go in and build relationships.” In fact, building those separate-account relationships with financial advisers helped IXIS Asset Management Distributors build its mutual fund business, Mr. Pelletier said. “It wasn’t a big leap to go from the separate account to this fund that they maybe had never heard of before,” he said. “We continue every quarter as we watch their growth to be impressed with the way they are running the company,” FRC’s Ms. DeWitt said. “Other competitors watch them in the managed- account business — they are the firm to watch.”

Latest News

RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence
RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence

Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.

Top Commonwealth advisor to recruiters: Stop with the cold calls already!
Top Commonwealth advisor to recruiters: Stop with the cold calls already!

“I respectfully request that all recruiters for other BDs discontinue their efforts to contact me," writes Thomas Bartholomew.

Blue Owl Capital, Voya strike private market partnership for retirement plans
Blue Owl Capital, Voya strike private market partnership for retirement plans

The collaboration will focus initially on strategies within collective investment trusts in DC plans, with plans to expand to other retirement-focused private investment solutions.

Why AI notetakers alone can't fix 'broken' advisor meetings
Why AI notetakers alone can't fix 'broken' advisor meetings

Wealth tech veteran Aaron Klein speaks out against the "misery" of client meetings, why advisors' communication skills don't always help, and AI's potential to make bad meetings "100 times better."

Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit
Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit

The proposed $120 million settlement would close the book on a legal challenge alleging the Wall Street banks failed to disclose crucial conflicts of interest to investors.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.