My trip to Houston came before Harvey swept into town causing catastrophic flooding in the area. It seems to strange to think how hot it was when I was there and I hope everyone I met on this trip, and all the city's residents, have not been too badly affected by the hurricane.
My first meeting of the day was with Mike Rome at Chilton Capital, a $1.3 billion RIA and Texas-chartered trust company founded in 1996. The firm provides a full range of investment services to individuals, business owners, endowments, foundations, family offices, retirement plans and trusts in the Texas area.
It has five in-house investment strategies: growth and income, taxable fixed income, tax exempt fixed income, a real estate investment trust (the West Loop Realty fund) and global active asset allocation. For exchange-traded funds (ETFs), it uses John Hancock Investments, which has a range that is subadvised by Dimensional Fund Advisors. The firm also uses Dimensional’s asset allocation in its growth and income strategy. All of their clients are either in the firm’s models or customized bespoke portfolios, which combine in-house strategies and Hancock’s ETFs.
Rome is Chilton Capital’s chief executive and is focused on growing its trust presence, while working on a few acquisitions of smaller RIAs. Since joining the firm, he has also developed its Women in Transition program, which focuses on working with women who are widowed, divorced, dealing with the incapacitation of a significant other, have inherited wealth or earned wealth. The biggest challenge Rome sees ahead is how to competitively distinguish Chilton Capital in the small to mid-size market against the backdrop of fee compression.
At the end of the meeting, one of the portfolio managers of the in-house strategies, Matt Werner, was able to join us, as well as chief operating officer Chris St. Paul.
Pictured left to right: Matt Werner, me, Mike Rome and Chris St Paul.
I then jumped in a taxi to visit Mark Draud and Kelly Johnson (pictured below, left and right).
The pair are part of the subadvisor selection team at VALIC. The team was formed in 1999 to provide fund selection, monitoring and request for proposal assistance, when VALIC began to offer standalone mutual funds beyond its variable annuity platform.
Johnson became part of the team in 2000 and Draud joined in 2001. The third senior team member is Robynne Parry, who unfortunately couldn’t make our meeting. All three are responsible for due diligence on the mutual funds and the variable annuity platforms.
On the annuity side, Johnson, Draud and Parry support senior investment officer John Packs by selecting, monitoring and replacing subadvisors with the board’s ultimate approval. Other team members, including Tam Nguyen, Jessica Dean, Krystina Hawkins and Rick Logue, also contribute to this process.
Their 150 fund partners are not shy about providing suggestions either. A rough universe of options is gathered by screening based on performance and other investment data from Morningstar. For the mutual fund subadvisors, they primarily use Morningstar resources for research on potential candidates for addition or replacement in a fund line-up.
Consistent top-half performance versus the appropriate peer group, an expense ratio below the average for the category, an appropriate amount of risk for the fund type and a lengthy manager tenure are all important considerations. Across mutual funds and the annuity platform, there is a total of $53 billion in assets under management.
After my trip south I jetted back to New York.
Here I caught up with Next Capital Management, a RIA in the Dynasty Financial Network. I met with Ryan Davis (pictured right), an elite member of Dynasty CIO Scott Welch’s ‘god squad’ formed back at Fortigent (see issue five), where he used to be in the alternative investments team.
Next Capital was founded in 1999 by ex-Goldman advisor Andrew Hart. Davis joined just over two years ago to help build its research efforts and has recently been appointed chief operating officer.
The firm has just over $1 billion in assets under management and works with around 180 clients across the tri-state area.
The firm is a relatively heavy allocator to alternative investments, and collaborated with GCM Grosvenor earlier this year to structure a customized multi-manager hedge fund vehicle for Next’s clients.
On the fixed income side, Next has increasingly incorporated non-traditional investments into portfolios, including private assets. Private equity has long been a challenge, but Davis is finding that improved back-office technology and a shift in attitudes are enabling better access to high quality solutions.
The firm recently joined the Dynasty Financial Network to improve infrastructure and allow it to focus on client service and growing the business. Davis is particularly excited about leveraging Dynasty's scale and focusing on technology, as Next navigates an industry that is rapidly changing under the influence of fintech.
My name is Amelia Garland and I am a relationship manager at Citywire. My aim is simple: to get to know the professional buyers across the US and engage with heads of manager research and due diligence, directors of investments and anyone who selects third-party products for their platform.
I am constantly on the road, if you would like me to pay you a visit, please don’t hesitate to get in touch at firstname.lastname@example.org or give me a ring at 646-532-6301. Don’t forget to tweet @GarlandGoesWest if you would like me to visit your city.
Next stop Chicago!