As its flagship mutual fund approaches a key milestone, a West Coast-based boutique is focusing its distribution efforts on the RIA and retirement plan channels.
Bryn Torkelson founded
| Bryn Torkelson
Deschutes Portfolio Strategies
wealth management shop Deschutes Portfolio Strategies
in 1997 after a decade at Dain Bosworth (later Dain Rauscher, now part of RBC). In 2006 the Lake Oswego, Oregon-based shop launched a quantitative, separate account strategy focused on buying closed-end funds when they're trading at significant discounts to net asset value. In 2012 Deschutes launched an open-end mutual fund version of that strategy under the Matisse Funds
brand, and this November that fund will hit its three-year track record. The strategy now has more than $200 million in assets under management, including $130 million in the mutual fund, which is PMed by Deschutes' own Eric Boughton
Torkelson describes the mutual fund as "the fastest growing part" of the Deschutes business, the part where he spends "the vast majority" of his time and effort. Some of Deschutes' retail clients are invested in the fund, and distribution so far has been mainly through other RIAs. The fund is available on big RIA custodian platforms and through some mid-size broker-dealers.
"The right channel for us is the RIA channel," Torkelson tells MFWire
There are limits to how big the fund can get (Torkelson estimates an AUM cap of $1 billion), so Torkelson is cautious about trying to distribute through large B-Ds or large consulting firms.
"It certainly isn't if you build it they will come," Torkelson says. "We're not a style box perfect fit in Morningstar, so we're not going to fit the large-cap growth box ... We're clearly something different."
The fund's distribution sweet spot, Torkelson says, is RIAs who build their own models and can incorporate the fund into those models.
"Models are becoming more and more prevalent in the industry for RIAs. That's a tailwind for us," Torkelson says. "We are certainly on a growth curve.
"We're doing some things internally, infrastructure-wise, software-wise. We continue to build out the portfolio management system and the research side," Torkelson adds. "We will eventually add another person or two on the portfolio and research side. That would be our next move."
Torkelson also describes retirement plans a channel that he's "optimistic about," and he says that his team is also positioning the fund for use in IRA rollovers, foundations, and pensions.
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