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Tuesday, July 16, 2002

First Up Meets the Mark

by: Sean Hanna, Editor in Chief

Investment flows turned into equity funds turned negative in the second quarter, executives at John Nuveen revealed today. The money manager had seen positive flows in the first quarter. Overall flows, including those into bond funds, were flat at $600,000 during the quarter. However, asset depreciation pushed Nuveen's assets under management one percent lower to $68.5 billion by the end of the quarter.

Despite the decline in assets, the bottom line jumped 11 percent to $0.31 per share. That figure was the same as analysts had been expecting.

John P. Amboian, Nuveen's president, explained that the firm kept its bottom line intact through cost cutting. "We contained discretionary spending and decisively exiting business that no longer contributed to our growth, such as defined portfolios," he told analysts.

He added that the outflows from the firm's growth portfolios were a reaction by investors to the current market and that he expects them to be temporary.

"We were simply caught in the downdraft of money moving from growth investments to other segments at this point in the market cycle." he elaborated. "This was a net outflow that was much lower than those of other growth managers last quarter," he added, noting that accounts were down only slightly to 75,000 accounts from 77,000.

Sales of Nuveen mutual funds during the quarter totaled $400 million. Gross sales for the first six months of 2002 totaled $6.7 billion with positive net flows of $2.5 billion, the company reported.

Amboian added that the firm's acquisition of NWQ, a value shop, should enable it to diversify its product line and boost its assets going forward.

"With the addition of NWQ we will be able to create several new product offerings such as multi-style managed accounts (MDAs) that leverage our combined investment capabilities and bring more innovative ideas to our target market," he said.  

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