MutualFundWire.com: A $13B Manager Is Looking for a Few Good Sub-Advisors

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Friday, May 10, 2013

A $13B Manager Is Looking for a Few Good Sub-Advisors

Aston Asset Management [profile] is looking at a few good sub-advisors that they'd like to hire for an international or global equity fund.

"We are a fund family with 23 funds. We do not want to have 50 funds, but we might want to add three or four more. We are always on the lookout for boutique investment managers who might make good advisors for Aston," Aston chairman and chief executive Stuart Bilton told MFWire today.

In particular, Bilton said, Aston is looking for a manager interested in opening a fund that would complement the international (EAFE) fund sub-advised by Barings and an emerging markets fund sub advised by Lee Munder, which had been launched recently.

Regarding Aston's domestic lineup, Bilton had this to say.

We are very pleased with our current mix of domestic sub advisors. However, we will always look at small-cap managers because two of our small cap funds are soft closed and, because we are sticklers for not allowing funds to get too large, it would not surprise me if a couple more of our small cap funds closed within the next 24 months.

Aston is also open to alt strategies. Bilton had this to say on the subject.

We would certainly consider adding a couple of stand-alone alternative strategies to our current fund mix. The problem is that the strategy will have to be very robust, have some institutional assets under management and be willing to accept mutual fund rather than hedge fund pricing. It is not easy to find a hedge fund group that can meet these criteria.

Regarding fixed income, Bilton said that his firm already has two fixed income funds, including one run by DoubleLine's [profile] Jeffrey Gundlach and team, and a second run by Taplin, Canida & Habacht (TCH).

Bilton outlined his firm's process and criteria for selecting funds in this way.

I have a strong belief that the worst thing you can do for shareholders is to keep replacing money managers of a fund. It takes a long time to determine portfolio manager skill and we believe that a complete market cycle is the shortest period for judging an active manager. We like stable teams, so we spend most of our time on the front end due diligence making sure that we have the right team. Consequently, once we have chosen a manager we are loathe to change them.

Obviously good performance and a rigorous investment process, but also a stable team of investment professionals. A one man band is too risky. We also prefer boutiques with at least a few hundred million dollars in assets under management.

In 2014, Ron Canakaris will have been managing the Aston/Montag and Caldwell Growth Fund for 20 years. Thyra Zerhusen has been running the Fairpointe Mid-cap Fund since 1999 and Phillip Tasho has been the skipper of both TAMRO funds since their inception in 2000. Jim Shircliff and Andrew Beck have been running River Road’s small cap strategy for more than a decade.