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7/6/2007 11:22:00 AM ET Related symbols: AMG (Related) BEN (Related) MORN (Related)
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SAN FRANCISCO (MarketWatch) -- After years of restructuring, a leaner Old Mutual Asset Management is aggressively planning to expand its business in the U.S., enlarging offerings for individual investors by doubling its base and ramping up a host of new mutual funds and institutional products. Within four years, the U.S. asset-management arm of London-based Old Mutual Plc (UK:OML: news, chart, profile) says it's aiming to run around $600 billion in domestic assets. 'Our game plan is to aggressively increase our presence in the U.S. with a combination of new products and increased visibility of a brand name well-known in Europe and other parts of the world,' said Kevin Hunt, the Boston-based firm's executive vice president. The global financial-services giant entered the money-management business in the U.S. in late 2000 by acquiring the former United Asset Management Corp. for $1.6 billion. Once a sprawling conglomerate with 40-plus different shops under its banner, new management led by ex-Mellon marketing executive Scott Powers cut that number dramatically. 'We just felt like there was too much redundancy,' Hunt added. 'At that size of a network, it was also difficult to manage. So we decided to selectively pare back.' Within two years, Powers and his management team had scaled that figure down to 16 money-management firms. Since then, they've been moving back into an acquisitions mode, adding a trio of small, but veteran, boutique shops. Along with those deals have come a series of new funds and investment portfolios. In the process, its assets under management have gone to $289 billion through the first quarter of this year from $123 billion in 2002. But most of that is geared toward big institutional investors. As a result, Old Mutual's managers say they aim to expand their mutual-fund assets to $20-plus billion from $8.5 billion in the next several years. With consolidation among asset managers picking up, some industry observes are skeptical. They point to established players such as Affiliated Managers Group (AMG : AMGNews , chart , profile , more Last: Delayed quote dataAnalyst
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Financials Sponsored by:, , ) , who've been doing much the same for years. Another issue is that 10 of the firm's mutual funds are former portfolios of Pilgrim Baxter & Associates, says Greg Carlson, a Morningstar Inc. analyst. Lagging performance and market-timing charges have plagued those funds in the past, he added. 'Old Mutual has certainly made some significant changes with its mutual funds,' Carlson said. 'They've lowered fees, strengthened management controls and limited volatility in many cases. But it's still too early to tell how much those improvements will relate to long-term performance.' Old Mutual is trying to sell its mutual funds through advisers rather than directly in no-load distribution channels. 'That could be a tactical marketing mistake if they're truly trying to reach the biggest mass market,' said Jason Browne, a principal at DAL Investment Co. Selling loaded funds also pits them against some the industry's most resourceful and popular marketing machines, added Carlson. Those include Capital Research & Management Co.'s American Funds family and Franklin Resources Inc. (BEN : BENNews , chart , profile , more Last: Delayed quote dataAnalyst
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Financials Sponsored by:, , ) , with its popular Franklin Mutual and Templeton lines. 'Old Mutual could have a tough time making inroads selling through advisers against that type of a competitor,' Carlson said. Key for Old Mutual in capturing more of the mutual-funds market could be how it leverages a rich tradition in designing successful portfolios for institutional investors around the world, says Browne.
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