An 11-year-old Chicago-based shop is entering the mutual fund business by taking over a $660.4-million New York City-based mutual fund family.
| Richard M. Burridge Jr.|
CEO and CIO
, CEO and chief investment officer of RMB Capital
that, effective July 1, RMB stepped in as interim investment advisor to the three Burnham Funds
], rebranded as the RMB Funds
. On September 15, the funds' shareholders will vote on whether or not to keep RMB on as the advisor on a permanent basis. Two people from Burnham have already joined RMB, and watch for more to do so.
could not immediately reach Jon Burnham
, former CEO of Burnham Asset Management
, for comment on this story. Another Burnham executive was not immediately able to comment. Yet Krista Rivers
, senior vice president and director of RMB's asset management team, tells MFWire
that "Burnham is supporting the proxy and the transition."
The three funds are: the two-star, $96.7-million RMB Fund
, formerly called the Burnham Fund
and first launched in 1975; the five-star, $279.3-million RMB Mendon Financial Long/Short Fund
, formerly called the Burnham Financial Long/Short Fund
and first launched in 2004; and the five-star, $284.4-million RMB Mendon Financial Services Fund
, formerly called the Burnham Financial Services Fund
and first launched in 1999. RMB's own Todd Griesbach
took over as PM of what is now the RMB Fund, and its former PM, Jon Burnham, will stay on through the end of 2016 "as a special advisor and consultant to RMB", according to the fund trust's Q&A. The other two funds are subadvised by Mendon Capital Advisors Corp
and PMed by Mendon founder Anton Schutz
, who has PMed both funds since inception.
RMB, which dates back to 2005, has three main business lines: asset management, retirement planning services, and wealth management. That asset management business includes a hedge fund platform but, prior to the Burnham changes, no mutual funds. RMB's 120 employees now work with $5.2 billion in assets, including $660.4 million in the three mutual funds and $1.6 billion in AUM outside the mutual funds.
In an RMB Investors Trust proxy statement with a Q&A
, the funds' board explains why they "determined to change investment advisers":
The Board determined that replacement of Burnham as investment adviser was in the best interests of the Funds and their shareholders because of the Board's concerns with respect to, among other matters, Burnham's financial condition, regulatory matters related to affiliated persons of Burnham, and the succession planning for Jon M. Burnham, the portfolio manager manager for the RMB Fund (formerly Burnham Fund) ...
Several factors were considered by the Trustees in connection with their decision not to renew the Current Agreements. These included criminal and civil complaints filed in May 2016 against certain affiliated persons of Burnham and BAM Holdings, LLC ("BAM Holdings"), the parent company of Burnham. No assets of the Funds were compromised. However, the allegations raised serious concerns for the Board and raised questions ...
Indeed, Devon Archer
of Burnham Asset Management, was named in early May as one of seven defendants in both a federal criminal securities fraud case
and a civil SEC case
about what the SEC calls a "tribal bonds scheme". (Burnham itself is not named in either complaint, and, as noted above by the funds' board, "no assets of the funds were compromised.") Per Burnham Asset Management's form ADV
, Archer and Kirin Global Enterprises control Burnham parent BAM Holdings, and Archer is also managing director of hedge fund shop Rosemont Capital Management and vice chairman of Chinese private equity fund manager Bohai Harvest RST (Shanghai) Equity Investment Fund Management Co., Ltd.
As for the funds' board picking RMB, the Chitown shop already had connection with the Burnham Funds. Schutz's Mendon Capital also manages one of the four hedge funds on RMB's hedge fund platform.
"RMB was a natural thought for [the Burnham funds' board] to consider," Rivers says. "It was one of those situations that came up unexpectedly."
Rivers confirms that BNY Mellon
continues to serve as the funds' transfer agent, Foreside
as the funds' distributor, and UMB
as the funds' administrator and custodian.
"Currently we're keeping all service providers," Rivers says. "They've all been terrific in this transition ... It's great to see everyone working in the best interest of shareholders to make this happen smoothly."
Looking ahead, RMB may be launching more mutual funds, too. Rivers notes that RMB has "a number of strategies in-house that would be great in a '40 Act structure."
"Expanding into the mutual fund business is something we've contemplated for some time, and this was a great opportunity for us to do so," Burridge states.
Watch for some Burnham folks to join RMB in the coming months.
"Two of their sales people are now RMB employees," Rivers says. "We are likely to bring on a couple more people from Burnham."
RMB's asset management offerings, historically, were distributed mostly through its own wealth management business. Rivers, a 21-year veteran of Ariel, joined RMB in 2014 to "to really broaden the distribution" of RMB asset management offerings , to "develop a plan to market them externally looking at a more institutional client base: endowments, foundations, family offices, other sophisticated RIAs like RMB," Rivers says. As for the mutual funds RMB is taking over, "they're not direct-sold funds primarily."
"Most of the assets in the funds right now are through broker-dealers and intermediaries," Rivers says. "We'll just be building on that effort, looking at strategic partnerships where we can get good shelf space and establish good relationships and have products that fit multiple lines of a broker-dealer's business if possible."
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