You may not have heard of Keeley Asset Management
(KAM). That’s because, for the large part, the Chicago-based money manager has most of its eggs in the institutional basket. But the firm also happens to run one mutual fund, as well.
In many ways, the fund is a sidenote to the firm, which runs approximately $1 billion in institutional money. The Keeley Small Cap Value Fund, with $158 million in assets, makes up 16 percent of firm’s total assets.
KAM has done little to market the fund, now more than 10 years old. And that strategy made sense for the Keeley family, who started the fund initially for friends and family. But despite the lack of advertising, the fund’s assets have grown steadily.
That zero-marketing strategy is about to change, says Mark Keeley
, president of Keeley Asset Management. While the firm is not planning a media blitz of any kind, KAM has decided to sign on at long last with a fund supermarket. The fund will be offered on Charles Schwab’s OneSource
platform at the end of Thursday or on Friday, says Keeley.
"We really weren't that motivated to pay for that supermarkets [in the past]," says Keeley, whose father manages the fund. Although the high cost of fund supermarkets was and is a deterrent, Keeley says that the Schwab decision is a response to calls about the fund from interested advisors.
In addition, Keeley cites an awareness of the way that the funds are distributed: "People don't buy [mutual funds]...they're sold."
Despite an atmosphere of increased regulation and higher costs, Keeley says the firm remains committed to its solo fund. But as for whether the firm would have started the fund now – probably not, says Keeley.
Keeley estimates that a one-fund firm has to maintain at least $50 million in assets to break even. KAM carried a loss for many years until the fund became profitable, he adds.
Smaller firms are also at a disadvantage because all of the fund’s costs must be spread over just a few funds versus a fund complex, like Fidelity or low-cost Vanguard, which prevents the Keeley fund with other funds on cost.
The problem is two-sided for the Keeley fund –"I've got a fund that's below average assets in my category, and five basis points above the ratio," Keeley says.
Small firms could be helped out by a number of measures, such as asset-adjusted cost ratios and open-architecture fund distribution, says Keeley.
Keeley isn't one to wait on the changes; in the meantime, Keeley says he has a stack of cards from interested advisors to call up, and plans on making an appearance at Schwab’s upcoming Philadelphia conference.
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