Birmingham, Mich.-based Munder Capital Management faces 2000 with a new CEO and a hot new technology mutual fund -- and stable ownership.
Coming on the heels of its wildly successful Munder NetNet fund -- an Internet mutual fund whose assets now stand at a staggering $7 billion -- Munder is seeing rapid growth in its Munder Future Technology fund. Launched in August for institutions and in October for individual investors, Future Technology has already attracted $600 million.
The new fund is narrower in scope than NetNet, says James Robinson, named Munder CEO on Jan. 6.
NetNet holds the stocks of 60 to 80 companies in three major "buckets," Mr. Robinson says: pure dot-com companies like Amazon.com Inc.; Internet infrastructure companies that build equipment, including Cisco Systems Inc.; and companies that stand to benefit from the World Wide Web's growth, such as retailers with an aggressive online strategy.
The Future Technology Fund, in contrast, holds 20 to 30 stocks in technology and communications services, rather than pure website sponsors, developers or users. It would own, for example, Cisco, Intel Corp. or MCI Worldcom Inc., but not Amazon.
NetNet has become the biggest and most successful Internet fund, rising 175% in the trailing 12 months ended Jan. 13, compared with 167% for the Dow Jones Internet Index -- and 21% for Standard & Poor's 500 stock index.
But even as Munder has sold web investing to the masses, its original business -- investing institutional money for pension funds, foundations and wealthy families --has stalled. It has $50 billion under management now, including NetNet, up from $44 billion a year ago, according to the Crain's Detroit Business list of money managers in that area. That means most of its growth can be attributed to NetNet.
Mr. Robinson says his task is to "complete the circle and get us known more as an institutional firm again."
To do this, Munder will court the cash-rich management teams of some of the tech companies with which it's now familiar.
Mr. Robinson says Munder is already helping dot-com companies invest proceeds of stock offerings.
He says Munder wants to expand into cash management, setting up retirement plans, and creating hedge funds and internal venture-capital funds to use as employee retention vehicles.
And perhaps best of all for company morale, after a year, 88% owner Comerica Inc., the Detroit bank, has taken Munder off the block.
Why? For one thing, there's the NetNet explosion. Michael Monahan, the retired Comerica president who spent three months as Munder's acting CEO after the abrupt departure last fall of Paul Tobias, says Munder "has become an increasingly attractive business" over the past 18 months.
Also, Mr. Monahan says, the stock market has been increasingly tough on bank stocks.
banks? no respect
"Comerica is a very good commercial bank, but no matter how good it is, the market will not reward them for it," he says. "That makes fee income increasingly important to Comerica's own market capitalization."
Mr. Monahan says Comerica tapped Mr. Robinson for the job after starting, but not completing, a national search. "Within a couple of months I became convinced that Jim was the right person, that we needed to end the uncertainty and that there was nothing to be gained by continuing the search," he said.
Munder's competitors say they wish Mr. Robinson and Munder well.
"I don't know him, but people I talk to who do know him say nothing but good things about the guy," says Anmar Sarafa, president and chief investment officer of Steward Capital Management in Bloomfield Hills, Mich. "He's got a pretty tall order to fill right now, a lot of changes to handle, but their growth has been pretty phenomenal."
David Sowerby, chief economist and portfolio manager at the Bloomfield Hills office of Boston money manager Loomis Sayles & Co., is a local booster:
"It's certainly in Detroit's best interest to want to see success for Munder. Now, do I want them to succeed as much as Loomis Sayles? No, because I wear a jersey that says Loomis Sayles. But I think Detroit has talented individuals and deserves a spot in the investment management arena, and we don't need to have every investment portfolio in Detroit managed in New York or San Francisco or Chicago."
Mr. Monahan also says Comerica is working on a plan to cut its stake in Munder to 80% by selling more of the company to its employees.
