Want a better sense on whether your alt strategies are worth a go? Work with a home office.
That's the philosophy of the investment executives at the Leawood, Kansas-based Cognios Capital
, which shares its team with its sister company Brandmeyer Enterprises
, which is the home office of the Brandmeyer family of Kansas City.
"A single family office obviously can be very demanding for all the right reasons. They know what they want. Based on that experience, you can develop very high levels of customer service and low cost. We have the goal of taking some of the investment strategies we use for Brandmeyer and offer them to outside clients in the form of mutual funds," Cognios president and chief investment office Jonathan Angrist
recently told MFWire
There is something to be said for that. Home offices are notoriously demanding with regards to investing performance, and have to be finicky when contracting financial services. This can make them great skunk works for investment strategies and products.
For example, Cognios' first mutual fund, the Market Neutral Large Cap Fund
launched in January, is based on a hedge fund strategy used by the Brandmeyer office for years.
The fund recently gained access to the Fido, Schwab and Pershing custodian platforms
. Angrist's team is working on translating more strategies into the mutual fund format over the course of this year.
Developing the fund took roughly a year, Angrist says. They devoted a lot of effort to making the fund friendly to a wide range of investors. For example, he says the strategy was designed to be simple, consisting of a long and a short portfolio, both of which are composed of S&P 500 companies. All of the positions are liquid and in fairly large companies. No derivatives, options or futures are used. The fund has a minimum investment of only $1,000.
And, rare for an alt strategy, it boasts only 10 percent of leverage.
"We use only a modest amount of leverage, which we think broadens the appeal of it-- makes it palatable to a broader audience. We have tried to develop this product so that it is very simple to understand. It is not complex. It doesn't use a lot of leverage. If appropriately explained, it can be used in a portfolio for a wide variety of clients, ranging from young investors to retirees," he said.
Angrist said the team also devoted a great deal of time and effort perfecting the fund's prospectus.
"We've spent a lot of time writing the prospectus in a way that we think the typical investor can understand. We think our prospectus is particularly good. Our strategy is very simple. I think the average investor should understand what is happening with their money. People need to be comfortable with what is happening to their money," he says.
Angrist is also a co-founder and PM at Cognios, as well as chief investment officer at Brandmeyer Enterprises
, the home office of the Brandmeyer family of Kansas City. Further in the past, he was co-owner and PM at Helzberg Angrist Capital
, and before that, served as a PM at Kornitzer Capital Management
. The management team for both Cognios and Brandmeyer is the same.
Angrist envisions a "full suite" of liquid alt funds, and intends only to do alts.
"We want our mutual funds to all have a unique twist to them in some way. Unique and interesting in ways that are not always available to the general investing public," he says.
Currently, Cognios' sales efforts are handled by chief executive John Brandmeyer
, director of investor relations Azure Postell
and director of business development Kerry Bush
. Angrist expects the firm will start to build out its sales force later in the year.
"We also want to introduce the product idea directly to RIAs and independent broker-dealers. Eventually, we are going to consider the possibility of introducing investors to the fund through one or more of the wirehouses," he says.
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