Two Small Subadvised Fund Shops IntermiX
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Wednesday, May 13, 2015

Two Small Subadvised Fund Shops IntermiX

A pair of subadvised mutual fund shops on opposite coasts are joining forces to create a firm with a combined $1.1-billion in assets under management and a focus on risk management.

Jerry Murphey, president and CEO of FolioMetrix [profile] (based in Portland, Oregon), and John Pileggi, managing partner of American Independence Financial Services [profile] (based in New York City), confirm that on Friday they signed a deal to merge their two shops. The deal, slated to close in September 2015, will create a new firm under the RiskX Investments brand, taken from FolioMetrix's line of RiskX mutual funds.

Pileggi will serve as CEO of RiskX, and Murphey will serve as president. The single-manager subadvised funds (and separately managed accounts) under the American Independence Funds brand will keep that, while FolioMetrix's multi-manager, tactical, subadvised funds (and SMAs) will use the Rx Funds brand. American Independence's team of 18 currently offers 10 mutual funds, while FolioMetrix's team of 14 offers 11 funds, though the fund lineup may change as the two firms merge. American Independence has about $820 million in AUM, while FolioMetrix recently crossed the $250-million AUM mark.

FolioMetrix has a team of 14 and is backed by Grail Partners, an M&A shop that specializes in the asset management industry. Though the terms of the American Independence-FolioMetrix interview were not disclosed, Pileggi confirms that "Grail and an undisclosed private investor together put capital in and will stay involved."

"It's essentially a merger of equals," Pileggi tells MFWire, "Both management teams are going to have fairly significant and fairly equivalent stakes, with outside investors also having a significant stake."

"RiskXInvestments will combine two great firms to promote active risk management of all types for all clients," states Don Putnam, managing partner at Grail Partners. "We will help the RiskX Investments team pursue organic growth and strategic partnerships."

Pileggi says he's been writing lots of "one firm" memos.

"We have a great product suite between the two firms," Pileggi says. "We're going to operate as one firm. We're going to succeed as one firm."

"Everybody is 100-percent pulling together," Murphey tells MFWire.

Murphey says that working with Pileggi and the rest of the American Indepence team has been "a powerful thing to experience".

"You really see a seasoned professional who knows the ins and outs of this business and how to do the small things that really make a difference," Murphey says.

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