Both Prudential Investments of Newark, N.J., and Delaware Investments of Philadelphia have announced major realignments for their mutual fund management divisions. Prudential will be uniting two asset management divisions while Delaware will be separating its retail fund management business from its institutional business.
Prudential Investments, with more than 60 mutual funds, will be combining its public equity asset management unit with its wholly-owned subsidiary, Jennison Associate, an institutional money manager, of New York. The combined equity management unit will operate out of Jennison's New York offices.
Sixty-five Prudential employees will relocate by the end of this year to Jennison's headquarters and join Jennison's current 169 employees, said Tim Biggs, a spokesperson for Prudential.
"To be a successful asset manager we have to be a leader," said Biggs. "With this (combination) we accomplish this in one stroke." The combined investment firm will manage more than $116 billion and will blend Prudential's value, international and quantitative investment expertise with Jennison's core growth investment discipline, he said.
Jennison has been a Prudential subsidiary since 1985. Jennison currently co-manages three Prudential mutual funds, the Prudential Jennison Growth Fund, the Prudential Jennison Growth & Income Fund and the Prudential Jennison International Growth Fund. Jennison is also one of the two outside investment managers Prudential recently hired to manage its Strategic Partners Growth Fund which is in its initial subscription period and will be introduced in June. Alliance Capital is the other investment manager for the new fund.
While Jennison has traditionally managed institutional money, its founding director and chief investment officer, Spiros Segalas, has also been the sub-adviser to the retail-oriented Harbor Capital Apreciation Fund since 1990. The Harbor Capital Appreciation Fund, which is sponsored by Harbor Capital Advisors of Toledo, Ohio, is a Morningstar 5-star fund with $9.2 billion in assets.
Prudential will gradually be repositioning several funds and merging others, the company said.
Delaware Investments, a subsidiary of Lincoln Financial Group since 1995, with a total of $50 billion under management, has chosen to separate its institutional money management from its retail fund management business.
Delaware is creating a separate retail products and retirement organization unit. Mary Rudie Barneby, formerly head of Delaware's Retirement Financial Services unit, will become president of Delaware's Retail Investor Services division.
"For too long, Delaware has acted as though it was an institutional company with add-on mutual funds," said Ed Halderman, CEO of Delaware, in a statement.
Delaware, like other successful money management firms, had its roots in the institutional investment arena, but wanted to expand into the retail marketplace.
"We realized that to be a serious player, we'd have to step up to the plate and not see this as an adjunct to our institutional money management," said Mary Rudie Barneby, formerly head of Delaware's Retirement Financial Services unit who will become president of Delaware's Retail Investor Services division.
Delaware also recognized that its institutional investors had different requirements than its retail clients, said Barneby. Institutional investors look for products that fit narrowly-defined asset classes and match up to specific benchmarks, Barneby said. Retail investors, on the other hand, usually have much broader mandates and usually want more flexibility.
To satisfy both audiences, Delaware chose to focus on both by separating the two, she said. But Delaware is treading carefully to be sure its does not disenfranchise either of its client bases or the broker/dealers through whom it sells its products.
"We're trying not to disrupt the sense of comfort our clients have," Barneby said.
The separation will extend to Delaware's mutual fund portfolio managers.
