Jim Atkinson leads Guinness Atkinson Asset Management, which has $359 million in assets under management, a staff of 20 and an offering of eight no-load mutual funds.
Money Management Executive recently caught up with the chief executive officer to discuss--among other things--the unique theme of the firm's investment strategy: "human progress," or the mindset that accelerating change and human progress will support long-term investing trends.
Tell us about your firm's background.
We're big picture thinkers and we're optimistic. We believe the human condition has never been better. We focus on a number of themes that are reshaping the planet. All of our funds are no-load. We have two major distribution channels: self-directed investors and fee-only advisors. Historically we've had a majority of business in the self-directed channel, but we know that to grow the firm we must do better in the fee-only advisor area. That's why we recently hired Frank Zukowski to the position of national sales director. In this role, he will focus on serving registered investment advisors (RIAs) and bank trust departments.
We see the growth of fee-only area, and it fits with our philosophy. I think we're more attuned to fee-only advisors in terms of compensation and the way we and they think about client needs. When we launched our oldest fund in 1994, we felt no load mutual funds were better than today. Over that time our business model has stayed the same--we've always been focused on the self-directed investor, who is more sophisticated.
How did the financial crisis impact you and your business?
I've been in the financial services industry since 1979 and I've seen some scary events but none that shook me like this financial crisis. That said, we stayed true to our beliefs and our commitment to long-term investing. This is where our human progress view really helped. The markets may have been in crisis but the human condition has continued to improve. Despite the crisis, globally, per capita GDP has doubled this century. I recently came across some of our letters to shareholders written during the heart of the crisis and as scary as things were our insistence that things would get better and the markets would recover did in fact play out. And while we've always had a strong investor focus the crisis forced us to realize that many Baby Boomers were underserved by the financial services industry as a whole. Specifically many Baby Boomers are nearing retirement without adequate savings and many made the mistake of liquidating at the worst possible moment. This realization led directly to the launch of our Inflation Managed Dividend Fund (GAINX).
How are you most profitable?
We specialize in three big themes: 1) Asia. We will eventually see China as the world's largest economy and wonder how and when did China surpass us? In the 1990s we ran an ad in the Wall Street Journal about the rise of Asia and a reader accused us of being un-American. The daily drumbeat of news from China is consistently negative. But, if you look at the big picture the incredible rise in living standards for such a large population over such a short period of time is unprecedented in human history. If you haven't been following China for 30 years, you don't really understand.
2) Energy. We have traditional and alternative energy funds. Demand and growth in energy is inexorably marching upward. There's a lot more demand from emerging markets. We don't believe the world is running out of oil soon, but the easy/cheap to find and produce oil is gone. The rise of alternative energy is being driven by cost and environmental factors.
3) Innovation. Our Guinness Atkinson Global Innovators Fund doesn't focus on technology per se, but rather the business changes brought about by technology and global competition. Virtually every industry is more competitive and changing at a rapid pace. This acceleration impacts everything, including pop culture. Watch a few minutes of 1960s era sitcoms on Nick at Nite to get an idea of how terribly simple and slow life used to be.
What specific companies are included in your Guinness Atkinson Global Innovators Fund?
Specific companies include: Best Buy, TD Ameritrade, State Street, Comcast--it ranges over various industries including financials, retailers and communications.
I should add a mention of our Inflation Managed Dividend Fund, which we consider to be rather innovative. The fund seeks moderate income and dividend growth at a rate that exceeds the rate of inflation. The first 15 plus months performance has been excellent, as we expected.
What challenges do you see among RIAs?
We're quite bullish on the fee-only segment, meaning we believe the RIAs will continue to be a growing segment.
What have you done to enhance your services to the RIA market?
Besides hiring Frank Zukowski, we make our portfolio managers quite accessible. We produce a robust amount of educational information. We plan to increase our presence at advisor trade shows, such as Morningstar, Schwab, TD Ameritrade, the National Association of Personal Financial Advisors and the Financial Planning Association. One of the reasons we hired Frank is because he embraces our optimistic human progress theme.
As an industry, ETFs are growing at a quicker pace than any other financial instruments. Why do you think that is?
We're looking to launch an ETF in the next few months. We're believers in ETFs. It was slightly difficult for us to come to this conclusion as two things bothered us: First, it's the complexity of ETFs. However, as we got to understand minutia, it became clear that this complexity was there for a good reason. Second, we were put off by the passive nature of most ETFs. We are, after all, active managers. It took us a while to come to grips with this issue. But we have in a rather elegant manner. ETFs are gaining traction because they're cheaper, more transparent and fairer. These are all benefits to investors.
What is the next avenue of growth for you in terms of distribution?
As we grow, we will move into other channels and products. For the time being, we're putting our effort behind the direct and RIA channels and on the product side ETFs.
Can you talk more about your "Investing in Human Progress" initiatives and why is that a game changer?
We believe there are a lot of macro themes reshaping the planet. The prevailing view is that the world is getting worse--not better. We reject that notion. We think the human condition is fantastic and will continue to get better. Our view is that if people understand the true state of the planet, they'd behave differently and make different investment decisions. For most people the big picture is one of negativity. The media focuses on the negative...good news is rarely news.
But the facts tell a different story. By any measure, per capita GDP, life expectancy, literacy, education, leisure time, you name it; by any meaningful statistical measure we have never had it so good. Are there problems? Of course. But this preoccupation on the negative is misguided and is not without its costs.