AIM Management of Houston, Texas. Is not a low-profile, slow-growing mutual fund company any longer.
The fund company began in 1977 by launching a high-yield bond fund then, three years later, a low cost institutional money market fund. In 1986, it pushed into the equities market by acquiring what has since become the AIM Weingarten, AIM Constellation and AIM Charter Funds.
Now, 12 years after hiring Michael Cemo to lead AIM's marketing efforts, the firm has suddenly shaken off its conservative approach and turned aggressive.
Cemo, a former chemical engineering-turned-economics major and then high school chemistry teacher, spent 16 years working his way up at American Capital of Houston, the predecessor to Van Kampen American Capital. He eventually was promoted to national sales manager. Now, as president and director of AIM Distributors, the marketing and distribution arm of AIM, Cemo is leading an initiative to add new products, increase distribution and build AIM's name recognition worldwide.
AIM, along with its sister company INVESCO Funds of Denver, are wholly-owned subsidiaries of AMVESCAP, a holding company in London. Cemo serves on the executive board of AMVESCAP.
AIM is expanding its business beyond its core 54 mutual funds which are predominantly sold through investment advisers and broker/dealers. It is currently developing a managed accounts program, forging alliances so it can include its funds in wrap programs of Merrill Lynch of New York and others. It also wants to increase its sub-advisory business.
Each of these efforts is a natural extension of AIM's strong mutual fund presence, Cemo said.
"We believe managed accounts are an important next step for the high-net-worth market," said Cemo in an interview. "The customer can say I love your growth style but I don't want this or that. Can you run a portfolio for me?'" AIM's total assets under management as of March 31 were $176 billion.
Cemo expects AIM to significantly expand its sub-advisory business, particularly in variable annuities. AIM currently sub-advises a variable annuity with Allstate Insurance Co. of Northbrook, Ill. Since it was introduced in September 1999, that product has attracted $2.5 billion, giving AIM the incentive to sub-advise other products, Cemo said. Over the past 18 months, AIM has built its sub-advisory business up to $7 billion as of mid-June.
AIM will soon be launching five offshore mutual funds domiciled in Dublin to add to its existing lineup of eight offshore AIM Capital Funds. Up until now, those funds have not done well, said Cemo. The offshore funds will be aimed at Latin American investors. AIM has recently hired a wholesaling team for the offshore funds, he said.
"Our goal is to raise $1 billion a year in offshore products," Cemo said. "We have a late start, but we're not having anyone turn us [away]. We have a strong brand and a strong allegiance."
Cemo, who believes that "bigger is better," said that statistics show the top fund companies are now siphoning off the majority of new fund assets. In 1990, the top 10 fund companies gathered 40 percent of net cash flows. But by last year, the top 10 fund firms collected 95 percent of new money, he said.
But AIM has decided it will not allow growth to come at any price. The firm has spent the past several months weeding out market timers, Cemo said.
"In the past seven months, we have asked $700 million to leave because they were day trading," said Cemo. Franklin Templeton of San Mateo, Calif. announced May 25 that it would seek to recoup the commissions paid on assets later found to come from market timers. But, Cemo does not see this as a viable solution for his firm.
"Charge-backs don't work," he said. "You have to deal with the problem when the money is on the table." Redemption fees tend to penalize all shareholders, he said.