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Rating:Going for the Gusto Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, January 08, 2001

Going for the Gusto

Reported by Tamiko Toland

Jones & Babson has launched a new fund family, the J&B funds, which will focus on aggressive growth and use a variety of sub-advisors. The firm's existing funds are sub-advised by David O. Babson in Cambridge, which once had part ownership but no longer does. Jones & Babson has unveiled three new offerings: a small-cap international, a small-cap aggressive growth, and a mid-cap aggressive growth fund.

Jones & Babson, which manages over $1.6 billion in seventeen funds, sells its no-load funds directly to investors and through intermediaries, but that may be changing as well.

"They are no-load as of now," said Claire Saunders, Jones & Babson's director of product management. "We are investigating the possibility of adding load shares right now."

Right now, Saunders said the company is refraining from an all-out branding effort for the new fund family. For one thing, the company may find itself with a new name.

"We have some issues right now with the parent company [BMA] and then the ultimate parent, Generali, in Trieste, Italy," she said. "We may be changing some corporate names, and if we do that, that will probably result in a name change on the J&B Funds as well."

Jones & Babson currently manage two other fund families, the Babson Funds and the Buffalo Funds. The Babson Funds employ a conservative value-oriented approach while the Buffalo Funds are niche-oriented blended funds. The J&B Funds add growth to the firm's product lines.

The J&B Small-Cap International Fund, sub-advised by Denver Investment Advisors, is managed by Michael Gerding. The J&B Small-Cap Aggressive Growth Fund, sub-advised by Minnesota firm Knappenberger Bayer, is managed by Gail Knappenberger, David Bayer and Jill Thompson. The J&B Mid-Cap Aggressive Growth Fund, sub-advised by Anchorage-based McKinley Capital Management, is managed by Robert Gillam, Frederic Parke and Alexander Slivka.

"We really feel that, with these three sub-advisors, there's a story to tell," said Saunders. "Two of the three don't have any other mutual fund exposure at this point, this is their first. There are also some interesting analysis and research processes that they use." Jones & Babson uses an advisory board of about a dozen investment advisors to help determine which products to bring to market. Advisors are chosen from those recommended by Schwab and Fidelity and do not necessarily have an existing relationship with the firm. Saunders said that the process helps them better understand the RIA market but also develops the firm's reputation in that community.

"They seem appreciative that a smaller mutual fund company is asking their opinion instead of just making assumptions," she said. "I think that they do respect the company, and that goes a long way, because their word of mouth can mean as much as any amount of money you spend on advertising or public relations."

Jones & Babson used search firm DeMarche Associates to help pinpoint sub-advisory candidates using the criteria established with the assistance of the advisors. Aside from performance and consistency, the firm also sought the cachet of a little known but up-and-coming sub-advisor. Speaking from her experience of listening to advisors, Saunders added, "They also seem to like it when there's a story to tell about the managers."

When the firm entered its search process with DeMarche, it didn't specifically ask for small sub-advisors, but it did play a role when it came time to narrow down the choices.

"In each category, DeMarche came back with six or seven finalists. When they came back on paper, we narrowed it to three that we were going to come in and have interviews," said Saunders. "I would say that the three we chose out of each category were small- to mid-sized firms, and I guess at that point we made a conscious decision based on all the research and what their track records were that we could maybe go to a small company that had a story to tell rather than a big company that was well known and would be harder to sell under the J&B brand because they were already well known."

Saunders said more funds will open in 2001 in the J&B Fund family and will be at the top of the agenda for the firm's next meeting with advisors. 

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