Fort Pitt Capital Group has a split personality. As an RIA, the Pittsburgh firm has $1.2 billion under management. As a fund provider, its Fort Pitt Capital Total Return Fund is 10 years old, with a five-star Morningstar rating for 10-year performance.
Why, then, is this fund held by less than 20% of Fort Pitt's clients?
According to Ted Bovard, a managing director and principal there it is all about process.
"We start with a plan, and act as a quarterback to see that the plan gets implemented," he said. "That plan determines how we invest for each client."
The introductory financial plan is provided to clients at no charge, Bovard said. If insurance or estate planning is needed, Fort Pitt will see that the client follows through by shopping for coverage or arranging a meeting with an attorney. "We also customize investment strategies to meet a client's specific situation," Bovard said. "We're not a firm that deals in insurance or trusts, so every client's plan winds up with a recommendation to buy insurance or create a trust."
Clients' needs can change over time, and so will their portfolio. "I recently met with a couple who have been clients for more than 12 years," Bovard said. "At the beginning of our engagement, they were heavily invested in bank stocks, so our main goal was to help them diversify, while minimizing the tax impact. Over the years, we've helped them develop plans for special needs children and for increased charitable giving. During this period, they've become more aggressive in their investing."
How does quarterbacking and customizing lead to a mutual fund held by a relatively few clients?
"We generally use individual equities," Bovard said. "However, we found that it can be difficult to get diversification in a modest-sized portfolio, or in a retirement account. We set up a fund to hold the stocks we're recommending to clients; the fund is held by some clients, mainly in their retirement accounts."
Fort Pitt Capital Total Return Fund has about $40 million in assets, according to Morningstar. The fund, created in 2001, ranks in the 16th percentile in the large-blend category for 10-year return, beating the category average by 1.17 percentage points a year. As of last report, the fund held 37 stocks, with the largest exposure (17%) to technology. "It's really an all-cap fund," Bovard said. "We're value investors, so we own stocks where we see the best value."