Citizens Bank of Flint snagged a high-performing value equity investment manager to help run its proprietary mutual fund.
The Michigan bank signed Systematic Financial Management, Fort Lee, N.J., to subadvise its Golden Oak Value Fund, which it recently formed by converting a common trust fund with $25 million of assets.
Some 70% of Systematic Financial's $850 million of managed assets is in a large-cap equity fund. This investment style has helped the firm to average 21.9% annual returns since 1991. Systematic Financial is an affiliate of Affiliated Managers Group.
The arrangement with Citizens, which manages over $410 million of assets, primarily in trust accounts, is exclusive. Any prospect with less than $100,000 to invest in a separate account at Systematic will be referred to the Golden Oak fund, which carries a $1,000 minimum.
"We look for this to be very beneficial to both firms," said Dana "Dan" A. Czmer, chief investment officer of Citizens Bank.
"That was one of the important points of distinction with candidates: Whether there would be any marketing and distribution on part of our partner or would we being doing that strictly by ourselves."
The Golden Oak family has five funds, three of which have outside managers. The money market fund is subadvised by Wellington Management Co., Boston, and the growth equity fund is subadvised by Nicholas-Applegate Capital Management, San Diego.
Mr. Czmer said the addition of Systematic coincides with the launch of a marketing campaign aimed at retail investors, which will include the introduction of an asset-allocation product.
Though the bank is attracted to Systematic's research, technology, and performance, as well as the potential for new business leads, Systematic is eager to reach the bank's retail market.
Citizens, a $4.3 billion-asset banking company, has 14 brokerage centers and 130 bank branches in Michigan and Illinois.
"This is the first full-fledged, nationally offered mutual we've subadvised," said Charles. J. Mohr, chief executive officer of Systematic.
Mr. Mohr added that joining Citizens as its starts to go after retail investors is exciting. "This is a product that serves the needs of lots of those people," he said.
