Buffeted by jarring volatility and steep losses in Internet stocks, the
Internet fund's adviser has hired an investment bank, apparently to help the firm hawk its offerings more broadly.
Kinetics Asset Management
announced Thursday it has retained
to "introduce us to new distribution opportunities" and "acquisition interests." Mutual fund companies typically hire investment banks to do one of three things: sell their firm, acquire another firm or find partners to sell the firm's funds through new sales channels.
It's likely that Kinetics is focusing on the third option.
"They're trying to strike up a global partnership with someone who can sell clones or offshore-registered versions of their funds for foreign investors," says Burt Greenwald, a Philadelphia-based fund consultant who spoke with Kinetics Chief Executive Steve Samson on Thursday morning. He added that Kinetics, which is not a client of his, is not interested in selling its business but might be looking for a partnership that will help expand its U.S. distribution, too.
Kinetics officials didn't immediately return calls for comment, but a Chase official confirmed that Kinetics is hunting for a marketing partnership that will broaden the firm's distribution.
Kinetics, which has $1.5 billion in mutual fund assets under management, probably isn't going to acquire another shop because it is too small. And another shop probably wouldn't acquire Kinetics because it is a one-trick pony focusing on one of the priciest and most volatile pockets of the market, Internet stocks.
"We know every buyer in the asset management business worldwide, and it's hard for me to imagine someone acquiring them with Net valuations and volatility being what they are," says Donald H. Putnam, managing director of
Putnam Lovell de Guardiola & Thornton
, a San-Francisco-based investment bank focusing in financial services clients.
Started in 1996, Kinetics made its name when its flagship Internet fund posted 196% and 216% returns in 1998 and 1999, respectively. Since then, the once-sizzling sector has cooled. Since Jan. l,
TheStreet.com Internet Sector
index is down 20.9%, and since its March 10 peak, it's down 30.8%.
The Internet fund's high-profile manager, Ryan Jacob, left last June to start his own fund. Although the Internet fund's 105.3% three-year annualized return is still tops among technology funds, according to
, its 7.1% one-year return ranks dead last (90 out of 90) in the tech category. Since Jan. 1, the fund is down more than 26%. Its $1.4 billion in assets represents nearly all of Kinetics' assets.
Kinetics launched the
fund last September and four more Internet-labeled funds at the end of last year. The Medical fund is up 23.6% since Jan. 1, but each of the new Net-labeled funds is underwater in 2000, according to the firm's
Web site. This year, the firm rolled out two additional funds:
Middle East Growth
Small Cap Opportunities
Villanova's Harris Gets Second Fund
certainly isn't waiting long to pile the work on Aaron Harris.
Less than a month after joining the asset management unit of
Nationwide Financial Services
, Harris is being tapped to run a second fund. He'll oversee the
Global Technology and Communications
fund, one of three new funds to be launched by Villanova, according to a filing with the
Securities and Exchange Commission
. Harris already manages the
Nationwide Mid-Cap Growth
In March, he left San Diego's
, where he was part of a team that posted the best record in the industry in 1999 -- a 494% return for the
Global Technology fund.
Villanova also will introduce a
Global Life Sciences
fund to be run by William Miller, a recent hire from
. A third fund, the
Nationwide Growth Focus
fund, will be sub-advised by a team from
Turner Investment Partners
, with Robert Turner as lead manager.
Details are still fuzzy, but the funds have a pretty wide mandate. The Global Technology fund will invest in tech companies regardless of market cap. It will charge expenses of 2.14% annually on class A shares.
The Global Life Sciences fund plans to invest in companies that are engaged in "maintaining or improving quality of life,'' and also will pick them across the capitalization spectrum. Annual expenses will run to 1.69% for class A shares.
Finally, Turner's portfolio will choose between 20 and 30 stocks in its portfolio and charge an annual fee of 2.06% for class A shares. The funds are available through brokers for a maximum sales charge of 5.75%.
New Small-Cap All-Star Team
Make way for a bouncing baby small-cap fund from
Norwalk, Conn.-based Managers is an "all-star" fund family, essentially picking a different cadre of highly regarded managers to run each of its nine stock and bond funds. The firm has tapped institutional small-cap specialists
Kalmar Investment Advisors
to run its new
fund. The fund is in the midst of a subscription period that began May 1 and will end June 16. It will launch June 19.
During the subscription period, investors can reserve launch-day shares at $10 each. When the fund launches, investors' money is collected and the managers start building the portfolio.
HLM and Kalmar will blend growth and value investment styles, according to the fund's prospectus. It's similar to the diversified approach the firm takes with the $2 billion
Special Equity fund, which blends growth and value styles in buying small- and mid-cap stocks.
The new fund looks fairly cheap. It doesn't levy a sales charge and, thanks to a fee waiver from Managers, its annual expenses are expected to be 1.30%, compared with 1.45% for its average peer, according to Morningstar.
Fund Openings, Closings, Manager Moves.
Ian McDonald owns shares of Managers Special Equity.