While most companies seem hesitant to spend their cash, at least one company is eager to take advantage of sluggish market activity to grow.
Touchstone Funds is eager to grow in scale and groom its funds into viable alternative for 401(k) plans, president Steve Graziano told Money Management Executive. "To the extent to which we can do another acquisition and gets of funds of scale, I would be delighted to do that," Graziano said.
Graziano said the firm focuses on distressed assets, or fund families demonstrating poor sales and performance, in its fund buys. Touchstone hopes to merge such funds into its better performing funds, both growing its fund assets and offering shareholders better managers and lower expenses.
"It's a win win. The shareholder wins, the bank gets money for its assets that it holds, and Touchstone gets the assets in its funds that it needs to get over the threshold that's necessary to grow the business at a more accelerated rate," Graziano said.
While it looks for potential candidates, the firm will also focus on rep as portfolio manager (or RPM) efforts and fund launches to continue growing its business, according to Graziano. Touchstone will focus on the major wirehouses — including Wells Fargo, Morgan Stanley, Merrill Lynch, UBS and LPL — and large registered investment advisors that work with defined contribution and endowment plans to grow its book of business. By working to get more funds in discretionary wrap models, Graziano hopes to grow fund assets to over $500 million, which only three of its 47 funds have achieved so far, he said. The firm plans to launch new products over the next couple of years to continue expanding its girth, he added.
RPM in particular is one way of "accelerating our momentum," he said.
"We think that the rep as PM trend represents a significant opportunity for Touchstone, because we can influence the sale in the field level rather than at the home-office level where scale would become an issue," he explained.
"That's how we plan to grow: By remaining focused on these few firms and to the extent possible focusing even more on those reps that are participating in their rep as PM program, because that is the fastest growing channel in the broker-dealer world and it happens to be aligned with much of what we offer."