is embracing new sub-advisors with two funds. The new HighMark Small Cap Growth Fund is slated to open by the end of April. The fund will be sub-advised by San Diego-based Nicholas-Applegate Capital Management
. The firm is also adding Deutsche Asset Management as a sub-advisor to its International Fund.
"For newer products that aren't in our core strategies, we're going to use sub-advisors who are well-known in their areas," said Greg Knopf
, managing director of HighMark Capital Managment. "It was appealing to us in part because they have no retail product."
HighMark performed the search itself, narrowing the field down to three competitors, including Dresdner RCM Global Investors
, in San Francisco, and Sirach Capital Management
, in Seattle.
While performance played a role in the decision, physical location also factored in for the HighMark, the proprietary family of very West Coast-oriented Union Bank of California. Nicholas-Applegate won the deal in part because of its ability to offer marketing support.
"They gave us a client relationships officer who does that," explained Knopf. Nicholas-Applegate provides access to portfolio managers, especially important with HighMark's intermediary clients.
According to Knopf, the firm is waiting to launch the fund "when the market settles down." Vagaries of the market aside, the fund is expected to be seeded with $20 million and ready to roll by the end of April.
The new fund will be available in A, B, and C class shares as well as a fiduciary class, a banking channel institutional share. The A class shares come with a maximum 4.5 percent load and 125 basis points total in fees. The B class shares come with a maximum 4.5 percent back-end load and 175 basis points total in fees. The C class shares come with a one percent annual trail.
HighMark's changes to its International Fund are based upon investment style diversification.
"We wanted to add certain characteristics to the fund, a more growth manager," said Knopf. "AXA's more value."
Given HighMark's current interest in expanding its lineup and in-house investment stable, the firm will shop around for sub-advisors for some of its new funds. According to Knopf, the firm is considering adding aggressive growth, long-term municipal bond, mid-cap value, and some specialty funds.
Both the bond and value funds can be managed internally, but HighMark will be looking outside for the other areas. Within specialty funds, the firm is contemplating technology, health care, and financial services.
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