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Monday, March 04, 2013

A Midwestern Firm Looks Up Market

Reported by Tommy Fernandez

After solidly establishing a foot print in the third-party intermediary space, Midwestern Scout Investments is looking to rev up its institutional business in a big way.

For example, the firm last week hired former Columbia Management alum Toby Cromwell to serve as head of institutional distribution and client service to build up Scout's outreach initiatives in the DC space as well as more traditional institutional clients such as endowments, foundations and plan sponsors. Scout's leadership also wants to aggressively bang the drum to investment consultants in all channels.

The value proposition, according to chief executive Andy Iseman: Scout's willingness to ignore the industry's all-too-common herd mentality:
Our strategies focus on out-performance over full market cycles. Too many firms try to get the best performance over a very short time frame and then reap the name recognition. That's nice, but what matters is continued longevity over full market cycles and having the independence to aim towards that day-in, day-out. That's what we want to deliver to the market place.

This message apparently has already developed traction. Scout recently passed $25 billion in AUM.

How does Iseman plan to take Scout to the next stage?

Well, for starters, they are methodically building up Cromwell's team for courting institutions. Don't expect a crazy sales hiring boom from Scout though. Iseman says that hiring will be slow and steady.

"It's much more important to use to find the right people than meet any hiring quotas," he says.

This slow and steady philosophy also applies to Scout's approach to fund launches. We are continuing to look at trends in the industry, looking at where investors would like to go. Most important, we are looking for places where we can put together a compelling investment strategy.
Part of this development includes an appetite for a possible adoption of an equity PM team. Iseman says that Scout is open to looking at value equity pros who know their stuff.
If you look at our lineup, we are not trying to be all things to all people. In our current equity lineup, we have growth and core strategies, but we don't have anything in the value mix. That is something we would certainly be looking at if there are opportunities out there.

Finally, Scout looks to band the drum on a few young funds that Iseman sees will grow increasingly popular in 2013's investment climate, including an 18-month old Unconstrained Bond Fund and a six-month old Emerging Markets Fund

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