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Performance pushes partners
by Steve Watkins Staff writer
6/23/2008
by Steve Watkins Staff writer
6/23/2008
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Growth plans in the money management world start with one thing: performance.
That's the first thing that pops out when the principals at Renaissance Investment
Management talk about how their firm's assets under management have soared to eight
times what they were four years ago.
Sure, Renaissance has had some other specific ways it has built its business. It added
distribution through major brokerage firms. It started subadvising other companies' mutual
funds. And the principals told their story to institutions that became huge clients.
But ultimately, none of it mattered if not for performance.
"As long as we keep the performance up, the growth will take care of itself," said Mike
Schroer, chief investment officer and one of the firm's managing partners.
Renaissance's large-stock strategy has beaten its benchmark in seven of the past eight full
years and is leading it again this year. Over the past 10 years, it averaged a 4.6 percent
gain net of fees, while the Russell 1000 Growth Index gained just 1.3 percent a year. Its
small-stock strategy enjoyed the same success, beating its benchmark in six of the past
eight years.
As a result, last year Renaissance's assets under management surged 45 percent, to $8.8
billion from $6 billion. It's up from just $947 million at the end of 2004. For a money
management firm, that's akin to revenue growth. They get their revenue from fees based on
a percentage of the assets they manage.
Renaissance attributes its growth to four key areas:
Institutions generated more than $1 billion of the $2.7 billion in assets Renaissance added
last year, Schroer said. The state of Montana gave it $150 million to manage. The National
Railroad Retirement Investment Trust brought $350 million and is now Renaissance's
largest account.
Subadvisory clients. Renaissance doesn't have its own mutual funds. They're expensive to
operate, especially for smaller firms. So it started applying its expertise to other firms'
mutual funds. They pay Renaissance a fee for managing those assets. "That is a potential
growth opportunity," Schroer said.
Said Paul Radomski, another managing partner: "That institutional growth comes primarily
through our reputation."
Its parent company, Boston-based Affiliated Managers Group acquired 70 percent of
Renaissance in 1995. That gave it back-office support and marketing clout, while freeing
up the advisers to do what they do best.
"It allows us to focus on investment management," Radomski said.
Live by the sword, die by the sword'
But without performance, none of that would matter much....read more
That's the first thing that pops out when the principals at Renaissance Investment
Management talk about how their firm's assets under management have soared to eight
times what they were four years ago.
Sure, Renaissance has had some other specific ways it has built its business. It added
distribution through major brokerage firms. It started subadvising other companies' mutual
funds. And the principals told their story to institutions that became huge clients.
But ultimately, none of it mattered if not for performance.
"As long as we keep the performance up, the growth will take care of itself," said Mike
Schroer, chief investment officer and one of the firm's managing partners.
Renaissance's large-stock strategy has beaten its benchmark in seven of the past eight full
years and is leading it again this year. Over the past 10 years, it averaged a 4.6 percent
gain net of fees, while the Russell 1000 Growth Index gained just 1.3 percent a year. Its
small-stock strategy enjoyed the same success, beating its benchmark in six of the past
eight years.
As a result, last year Renaissance's assets under management surged 45 percent, to $8.8
billion from $6 billion. It's up from just $947 million at the end of 2004. For a money
management firm, that's akin to revenue growth. They get their revenue from fees based on
a percentage of the assets they manage.
Renaissance attributes its growth to four key areas:
- Marketing. It started making its services available through brokerage firms in 1987,
when the firm then known as E.F. Hutton started offering Renaissance's management
expertise to some of its clients. Now Renaissance has boosted that to sell its
products through the major brokerage houses: Merrill Lynch, Morgan Stanley, Smith
Barney, UBS and Wachovia.
- Institutional clients. Huge groups such as pension funds, government and company
retirement plans started picking up on Renaissance's story a few years ago.
Institutions generated more than $1 billion of the $2.7 billion in assets Renaissance added
last year, Schroer said. The state of Montana gave it $150 million to manage. The National
Railroad Retirement Investment Trust brought $350 million and is now Renaissance's
largest account.
Subadvisory clients. Renaissance doesn't have its own mutual funds. They're expensive to
operate, especially for smaller firms. So it started applying its expertise to other firms'
mutual funds. They pay Renaissance a fee for managing those assets. "That is a potential
growth opportunity," Schroer said.
Said Paul Radomski, another managing partner: "That institutional growth comes primarily
through our reputation."
Its parent company, Boston-based Affiliated Managers Group acquired 70 percent of
Renaissance in 1995. That gave it back-office support and marketing clout, while freeing
up the advisers to do what they do best.
"It allows us to focus on investment management," Radomski said.
Live by the sword, die by the sword'
But without performance, none of that would matter much....read more
| They've been actively marketing their financial services firm. But their growth is clearly tied to performance. |
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