Growth equity manager Turner Investments Holdings has acquired Elkhorn Capital Group, an exchange-traded funds firm based in Wheaton, Illinois, the companies announced Wednesday.
The purchase marks Turner’s attempt to reinvent itself, leaving behind troubled fundamental growth-oriented strategies for what it called a “more disciplined, factor- and model-based approach with an emphasis on risk management.”
Turner plans to shut down its three existing mutual funds and return remaining assets to investors. ETF products, primarily, are to take their place. Elkorhn managed roughly $180 million in exchange-traded products as of the acquisition.
At its peak, Turner Investments managed more than $30 billion, but assets under management have dwindled to roughly $150 million, according to a spokesman. Protracted post-recession underperformance led to investor withdrawals and the departures of several executives and portfolio managers.
Last year, Turner merged with Veracen, and began to pivot to factor-based investing.
As part of the purchase, Ben Fulton, founder and CEO of Elkhorn, will become head of global ETFs. Jordan Golz, a product development and research associate at Elkhorn, will lead ETF product and business development.
Turner Investments has in recent years developed “a number of multi-factor and multi-asset class investment processes,” according to a statement by founder and CIO Bob Turner. With the addition of Elkhorn, he said the firm will gain propriety technology and expertise to “deliver enhanced investment performance and value.”
The new product suite will cover all asset classes, the firm said, including fixed income, equities, commodities, and alternatives, as well as environmental, social, and governance-oriented options.
Industrywide, many active managers are struggling as investors opt out in favor of lower-fee, passive products.
[II Deep Dive: Moody’s to Active Managers: You’re In Trouble]
Consultant Casey Quirk predicted earlier this year that these challenges would result in more merger and acquisition activity in asset management.
As of the first quarter of 2017, 41 deals had been announced, according to PricewaterhouseCoopers, including Softbank’s $3.3 billion purchase of Fortress Investment Group and the mega-merger of Standard Life and Aberdeen Asset Management.
“Our industry has undergone significant changes, with investors becoming both more fee sensitive and more risk averse,” Fulton said in a statement. “This merger provides the tools and expertise for Turner to deliver more predictable returns with enhanced value.”
