Highland Capital Management had a rough ride after the 2008 crisis, logging four years of outflows from its funds. In June 2012, ING and Ivy funds alum, Brad Ross, was brought onboard as president.
Ross set to work restructuring the firm and evaluating the personnel. Flows turned positive in January 2013. On Feb. 8, 2013, Highland dropped the Pyxis name, which its funds had been branded under since December 2011, and the funds once again became the Highland Funds.
With the hire of seven new directors Highland Capital is moving closer to the vision set in motion when Ross joined the company. In mid-June the Dallas-based firm hired: Anthony Wilson (San Francisco), Derek Andersen (Florida), Kevin Wentworth (Texas), Joseph Kearney (Long Island, N.Y.), Chris Shahda (Atlanta) and Tom Antonovich (Minneapolis) to join its team in the respective regions. Additional plans include a director of marketing to be added later this year.
Ross told Money Management Executive, that in the year since his hire much progress has been made. "When I first came onboard the real issue was that there were not some very solid strategies to bring to the market. As you may know, we restructured the whole firm in the third and fourth quarter of last year and upgraded every position, both internally and externally. Also, we decided after talking to many of our clients that the Pyxis name was not being well received, so the Highland name was brought back to the retail side of the business. I think this was the right thing to do. It has now been received extremely well."
Reversing the negative flows was the first order of business for Ross before the firm could begin building out its team. "After the restructuring last year the firm had not had positive flows for the previous four years. Before we would plan out any additional headcount we absolutely had to get the run rate business in positive flows. Since January 2013 that business has been in positive flows."
After flows turned positive Ross began to build the firm's headcount, "We have a plan that, as sales continue to increase we will continue to add experienced, high caliber, individuals into what we refer to as the money center cities of the country, and these recent hires reflect that strategy."
The search for the firm's marketing director is also nearing completion. "The search has been ongoing for a while and we're in the final stages, with several excellent candidates," Ross stated.
Ross plans on expanding the Highland team into 2014. "Right now with these hires, it puts us roughly at 16 wholesalers, with eight internals. What we plan to do is get to 20 external wholesalers by the fourth quarter or the first quarter of 2014. Then I plan on putting three or four hybrid wholesalers in the field to cover the RIA space. That would give us a total of 24 people covering our focus firms that are out in the field. Then we'll have 10 internals that are on the inside."
Advisor distribution is a focus at Highland with some new value adds in the works for the RIA channel. Ross said, "We have targeted national firms such as Merrill Lynch, Morgan Stanley, Wells Fargo, Raymond James and LPL. Then we are going to make a concerted effort in the RIA space, not just from a sales perspective--although that is a focus. We are working to bring some value add and practice building propositions to the RIA channel as well."
Ross said the new value adds are in the final stages of development. "We are getting ready to roll them out. We are trying to be unique and special, trying to differentiate ourselves a little bit. We're working on that right now with a focus group as well as with a group that is helping us put these programs together."
Highland is focusing on its existing product line when it comes to its expansion. "There are not going to be any new products. We are fortunate to have products that perform well. We have the number one floating rate product out there and that is going to be a very attractive investment in the near future," Ross noted.
There is one revamped product in the pipeline for later this year, Ross said. "Highland has a history, particularly on the institutional side of being able to be fairly global in nature and invest anywhere, anytime. One of the funds we have acquired--rom GE Asset Management in 2010--has been restructured and is being run by its founder, Jim Dondero, in the global allocation space. We'll be talking more about that in the fall. We have a pretty hefty presence in that space so it's not new to us."
In targeting advisors, Ross said relationships are key and have been a major focus for Highland. "One of the things that we are really focusing on is building out the national account team. We continue to broaden our relationships at the wirehouse level deeply across business units within the wirehouses. That is starting to bear fruit for us in a significant way. As I mentioned we are doing a lot of spending on building out our platform to deal with the RIA community. That is a significant investment."
Ross said Highland will continue to focus on its retail products going forward. "Given where the markets are right now, the products we are focusing on fit nicely. What you will continue to see is continued growth and a bigger presence on the Highland retail front."
