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Rating:After 11 Careful Months, an ETF Strategist Takes the '40 Act Plunge Not Rated 5.0 Email Routing List Email & Route  Print Print
Friday, September 12, 2014

After 11 Careful Months, an ETF Strategist Takes the '40 Act Plunge

Reported by Tommy Fernandez

There is always that one kid at the pool who thoroughly tests the water, its temperature, the clarity, the presence of other clumsy kids, before he or she finally splashes in and has a ball.

That's pretty much the way Newfound Research jumped into the '40 Act Space: very gradually, and then all at once. After an 11-month buildup, it launched one fund in June, the Newfound Risk Managed Global Sectors fund and two more in the past two weeks, the Newfound Multi-Asset Income and Newfound Total Return Funds.

Before these launches, the nine-person firm, headed by CEO Tom Rosedale, had marketed its investment strategies, built from ETF portfolios, via institutional accounts, SMAs and also sub-advisory agreements.

"We have six strategies and ultimately we want to make these strategies available in all product formats," Rosedale recently told MFWire.

The six-year-old Newfound made its first move into retail by hiring industry veteran John Mannixto serve as executive vice president of sales in October 2013. It also entered into a partnership with Virtus.

Newfound later built out its sales team in March of this year by hiring Andrew Gogerty as director of investment strategies, and Paula Boyd as senior vice president of sales and marketing.

CIO Corey Hoffstein said that the three funds are targeted for investors who want their income growth with a bit of risk management.

For instance, the Newfound Risk Managed Global Sectors fund "seeks to participate meaningfully in the upside of the global equity markets with an embedded risk management piece designed to mitigate downside losses," according to Hoffstein, while the Newfound Multi-Asset Income fund "creates a strong risk-adjusted income profile using alternatives and an embedded risk management process with the second objective of mitigating capital loss." The Newfound Total Return fund, he said, "seeks to generate income as well as have a conservative growth profile."

"The idea in developing all three is that you can really meet any investor's growth, income and risk profiles depending on the blend of these three strategies," Hoffstein said.

The next step is platform access.

Rosedale said that "we are going through that process now. We are available at Schwab and Pershing and are in the works with many other firms and independent B-Ds. We have been working on this over the past four months."

At the same time, Newfound plans to grow its sales team rapidly. How rapidly? here's how Rosedale put it:

We are looking for superstars to join our team.

We expect in the next 4 to 5 months, our sales and marketing team will probably double, and then in a year or so, probably double again.

We are looking for a mix. You always want to find the guys who have the stronger relationships. Whether is it from working firms like Schwab or Fidelity, but you also look for the young guys who are hungry and motivated. You can't build a team with five Lebron James'. You need people with different talents and different networks. We want some people with strong connections in the RIA marketplace and others with more experience amongst the wirehouses.

However, his philosophy towards sale staffing goes broader than that. Everyone in the company is expected to pull their weight in sales, including PMs.

"Even the PMs are active and regularly on the road. We don't all carry sales titles or have sales quotas, but we are all involved in this," Rosedale said. 

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