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 A group of former Wachovia Securities strategists have started their first mutual fund to complement an existing businesses managing separate accounts.
Riverfront Investment Group announced Tuesday that it has launched Riverfront Long-Term Growth Fund, which will invest in a variety of domestic and international stocks and bonds.
The timing of a new mutual fund might seem less than ideal, what with stocks taking a pounding of late. But Michael Jones, the chief and chief operating officer, said he thinks the down market could be a blessing.
"Given valuations in the market now, it's a great time to launch a fund. You can build a track record off some extremely distressed equity pricing," Jones said.
"We could stroke a long-ball from the performance standpoint."
Jones said he would be pleased if the fund raised $100 million in its first year, but he did not set an upper limit for how large the fund might grow.
John Davenport, director of research for ACG Advisory Services in Midlothian and a former Wachovia analyst, also said that launching in a down market might be an advantage.
"All this money exited mutual funds," he said. "That money is [going to] come back into equity. They may be a few months early, but it's not a bad time." But Davenport said marketing the fund might be difficult until it has a track record.
"A lot of people like me, who screen for mutual funds, won't consider a fund till it hits a three-year track record."
Jones said the Securities and Exchange Commission has strict regulations on how mutual fund managers may promote themselves, and that might mean the firm can not show its past experience managing separate accounts, or a privately managed investment account opened through a brokerage or financial adviser that uses pooled money to buy individual assets.
At Wachovia Securities, the same group managed $8 billion in separate accounts, Jones said.
Riverfront formed in April when Rod Smyth, former chief investment strategist at Wachovia, Doug Sandler, former chief equity strategist, and Jones, the former chief investment officer, set up shop in Chesterfield's Arboretum office park, bringing with them a few of their former support crew.
Riverfront has raised $250 million in its managed accounts business. That amount will likely continue rising at a $20 million per month clip because the firm's options are now available to Morgan Stanley and Merrill Lynch brokers, Jones said.
Separate accounts are only available to customers who have a minimum of $100,000 to invest, so the mutual fund will open up the Riverfront to investors with as little as $1,500 to invest, Jones said.
Click here to see how Riverfront's portfolios are performing. Aaron Kremer is the BizSense Editor. Please send story tips to
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