City National Corp. is buying investment research from an institutional asset management firm to jazz up the portfolios of its wealthy clients.
The Beverly Hills-based bank hooked up with Husic Capital Management, a San Francisco growth stock firm that manages $4.1 billion of assets for corporations, foundations, and endowments. Its average account size is $35 million.
City National, which manages $7 billion of assets for Southern California entrepreneurs and professionals, has primarily used a large-cap equity strategy in which it picks blue-chip stocks.
Under the agreement, City National will have dibs on wealthy individuals in several Southern California counties who seek out Husic services. People calling Husic directly, or through consultants, will be referred to City National.
"This will further diversify the program for existing clients," said Vernon Kozlen, executive vice president of City National Investments.
"It will also provide a strategy and a program to interest clients that would not traditionally look to bank trust investment programs," he added.
Yet instead of turning clients over to Husic, City National portfolio managers will use the investment manager's recommended strategies.
Financial terms of the arrangement, signed April 1, were not disclosed, but Mr. Kozlen was quick to point out it was not a subadvisory relationship.
"That's different from what a number of banks are trying to do by just hiring a subadvisory firm and just letting them do everything," Mr. Kozlen said.
Husic is not going after wealthy investors directly.
"We have always wanted to participate in the high-net-worth market but couldn't figure out how to economically," said Gary J. Kampmann, chief operating officer of Husic. "Our general philosophy is: Keep it simple. Add to investments, but don't mushroom marketing and operations."
Husic manages hedge funds that people tap into through fund managers.
"Managing money for high-net-worth individuals is a local business. People would rather go to local adviser," Mr. Kampmann said.
City National has 33 offices in Los Angeles, Orange, San Diego, Riverside, and Ventura counties. The bank's investment division offers asset management and trust services to individuals, nonprofit organizations, and businesses.
Husic's "all cap" style, in which it does research on all U.S. stocks, sounds broadly defined. In fact, it is focused. Mr. Kampmann said Husic concentrated on 30 to 33 undervalued stocks and that the top 10 will account for 40% or more of a portfolio.
"This situation should work well. Husic is not going to chase down a half-a-million-dollar trust account the banker wants," said Jeb Britton 3d, senior consultant at Spectrem Group, San Francisco.