(Bloomberg) -- Chase Manhattan Corp. told employees that it's closing its New York U.S. stock fund group and transferring the assets to Houston, in a move designed to improve performance of its asset management business.

Related Links

"We've taken these integration steps to strengthen our asset management capabilities and to better serve our clients," said Deborah Duncan, head of Chase's global asset management unit, in a memo to employees.

Chase's biggest Vista U.S. stock funds, which are managed by the New York unit, have lagged both their peers and Chase equity funds run by the Houston group.

Henry Lartigue, chief investment officer at Chase Investment Management Group in Houston will head the combined group. The Houston-based unit now oversees $31 billion in stocks for wealthy clients, institutional and retail investors, and runs a separate family called the Chase funds. Overall, the Houston group manages $70 billion.

David Klassen heads the New York group which has $7 billion under management, employs 32 employees, including money managers, traders and research analysts, and oversees the Chase Vista U.S. stock funds.

Klassen declined to comment, as did a spokesman for the bank. It wasn't clear from the memo whether New York employees would be moving to Texas.

"Every effort will be made to find alternative positions in Chase" for the (New York) employees, or to assist them in finding jobs elsewhere, the memo said.

"Sounds like a great opportunity if you like cowboy boots, pickup trucks and long-neck Lone Star beers," said Michael Castine, head of investment management recruiting at New York- based Highland Search group. "It's probably a stretch to get people with families to relocate."

Chase and Chase Vista funds haven't gotten much bigger in the past year. Combined assets in stock and bond funds in the two fund groups grew just 2 percent in the 12 months ended June 30, according to Financial Research Corp., a Boston-based firm.

Performance of New York-based Chase Vista's largest U.S. stock funds haven't kept up with their peers, the Houston-based Chase funds or the stock market.

The Vista family's biggest mutual fund, the $2.65 billion Growth & Income Fund, climbed an average of 19 percent a year in the past three years, ranking it in the bottom 45 percent of its category, according to fund researcher Morningstar Inc. The lackluster returns caused investors to pull $87 million from the fund in the second quarter, according to Financial Research.

The $1 billion Chase Vista Capital Growth Fund, which invests in mid-cap stocks, climbed an average of 15.3 percent over the past three years, ranking it in the bottom 40 percent of its peers. Customers withdrew $101 million from the fund in the second quarter.

By contrast, the largest Houston-based Chase stock fund, the $237 million Chase Equity Growth Fund climbed an average 32.6 percent per year for the past three years, ranking it in the top 10 percent of all its peers tracked by Morningstar.

The move to Houston doesn't affect the bank's bond or international money management groups. Mark Richardson will remain in New York as chief investment officer for U.S. bonds, and international stocks and bonds.

Lartigue has worked for Chase since 1984, when he started at the Chase Bank of Texas as a stock analyst. He left Chase in 1993 and 1994, when he served as an outside manager for billionaire George Soros's fund group.

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE