Bear Stearns Asset Management will make a major push early next year to gain business from pension funds--public plans in particular--by launching four investment strategies. On the quant side, BSAM will roll out micro-cap growth, large-cap core and 130/30, while in the fundamental space the firm will start marketing small-cap value. All four strategies were seeded with firm money earlier this year. The firm has $40 billion in assets under management, although only 9% of this comes from public funds. As public funds are the largest institutional channel, Mike Guarasci, head of traditional business, wants to pick up more business from that market.
At the end of 2003, Bear Stearns set a goal for its asset management division to bring in 10% of the bank's bottom line by 2010. BSAM brings in about 2% now. The firm has been hiring teams and individuals throughout this year to beef up its public fund business. Key hires include four portfolio managers from BKF Asset Management, and Ronan Burke, a public funds marketer from Hartford Investment Management Co.
Bear Stearns will start marketing micro-cap growth in January. The strategy will have a capacity of $400-500 million, so the target will be select large pension plans, foundations and endowments. Micro-cap is attractive to "those that are looking for alpha and can afford the ups and downs that can come with micro-cap," Guarasci explained.
The firm's large-cap core offering has returned 185 basis points set of fees above the Standard & Poor's 500 since inception in July.
Former BKF quant specialists Michael Rosen, managing director, and Lindsey Houghton, analyst, have been incubating a domestic large-cap 130/30 strategy for the past two months and Bear Stearns plans to offer it to investors around March.
Jordan Alexander and Stephen Friscia, managing directors, ran a small-cap value portfolio at BKF for two years, which they will recreate at Bear Stearns. The strategy returned 23.06% for the year ending Nov. 30, compared to 21.27% for the Russell 2000 Value index.
