First Liquidates Its Mutual Funds
MetaMarkets.com has gone up on the block, however its mutual funds will not be included in the sale. The San Francisco-based firm, which features full-disclosure investment management of its fund portfolios through its Web site, has decided that it will prove more attractive in the marketplace unsaddled of its OpenFund and the IPO & New Era Fund, and will liquidate those funds.
With approximately $11.5 million total in assets under management, the funds have not yet started to break even, but CEO Don Luskin asserts that MetaMarkets' decision to shut down the funds is not based on bottom-line savings.
'It's about a business judgement that at this time, in this extraordinary business cycle we've been through, it's important to get allied with a big company and achieve scale,' said Luskin. 'It's not that a small fund hasn't reached its own profit point; it's that, at this point in this terrible recessionary economy, you just have to have scale to get good prospects. The problem isn't that it's not paying for itself; the problem is that there isn't scale.'
Luskin declined to detail short-term savings conferred by the closings, but did say that four of the firm's 25 employees are currently dedicated to the mutual fund portion of the business.
Performance did not play a role in the decision, said Luskin, although he cited bad timing as a cause for the firm's current predicament.
'It's not a performance issue at all; it's a business issue,' he said. 'We're in a terrible bear market for anything. It's a tech wreck that's touching the whole economy and this is simply not the time for bold new innovators. That's really our thinking here.'
While it started with above-benchmark performance, the OpenFund started lagging this year, with a year-to-date performance of under -25%. The IPO & New Era Fund has lost more than 56% since its September 2000 inception.
Because the firm has no outside accounts, the mutual funds represented the substance of MetaMarkets' business. So what exactly is MetaMarkets selling?
'Think of the fund as a glass and the essence of our business, which is a unique intersection of media and money management, is the water in the glass,' said Luskin.
The potential of that 'water' ranges from applications in separate accounts to hedge funds, although the latter may pose some regulation-related problems. In particular, however, Luskin sees a tremendous market in the area of communications with financial intermediaries.
'We did a poll a couple of months ago where we interviewed advisors about whether this would be valuable to their work,' he said. 'We received an overwhelming positive response.'