MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
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Monday, November 11, 2024 A 31YO AM Launches a Mutual Fund As Seed Capital Last month, the folks at a 31-year-old, $4.3-billion-AUM asset manager in Texas rolled out an open-end mutual fund as seed capital for strategy they might also launch in hedge fund form down the line. The fund firm now offers 12 strategies, six mutual funds, and two ETFs.
The Bridgeway Global Opportunities Fund's inception date was October 15. The fund comes in a single share class (BRGOX), which comes with an expense ratio of 168 basis points (which bakes in a 138bps fee waiver promised through November 1, 2025). The fund's shares also come with a 200bps short-term redemption fee for investors who hold the fund for less than six months. Houston-based Bridgeway serves as investment advisor to BRGOX. The new fund's PM team includes: Pozharny; Montgomery, who is also a Bridgeway co-CIO; Elena Khoziaeva, another co-CIO; and Christine Wang, a PM. Montgomery says that the new fund is designed to be used in three ways: to "dial down stock market risk," as capital preservation, and even as a replacement for fixed income. "Traditionally, only high-net-worth and institutional investors have had access to hedge fund like strategies," Pozharny states. "This fund is designed to be agnostic with respect to the stock market direction and intended to address increasing correlation across global markets by aiming to deliver attractive and consistent risk–adjusted returns through a blend of diversification and reduced volatility." Montgomery confirms that the Bridgeway team plans to soft-close the new fund once it reaches about $150 million in AUM. After the fund hits that milestone, investors already in the fund will be allowed to continue to invest, as will RIAs using the fund in model portfolios, so long as they're not raising their allocation percentages unchanged. Also after that milestone, the Bridgeway team plans to launch a traditional private pool (i.e. hedge fund) with a traditional "1 and 20" (i.e. 100bps expense ratio plus 20 percent of gains). "The capacity of the strategy is much higher than just $100 million to $150 million," Montgomery tells MFWire. The idea behind the MF launch and the expected soft close, Montgomery says, is to give early investors in the strategy the benefits of being in a mutual fund version with better pricing. And if the mutual fund grows enough that the Bridgeway team does add the hedge fund version, too, the mutual fund's expense ratio won't change, Montgomery confirms. "It's nice to do something for earlier stage institutional investors or even individual investors ... who are willing to invest before we have a three-year track record," Montgomery says. "Early investors get rewarded for a lifetime of investing for having stepped up early." "As far as I can tell, this is the first time that any firm has used a mutual fund to raise seed capital!" Montgomery adds. In terms of distribution, Montgomery confirms that the fund is already available on both Fidelity's and Schwab's platforms. "We were told four weeks with one of those players, one of the big platforms," Montgomery says. "We pulled out the stops doing everything we could with good relationships and asking them to do us a favor to get this out there quicker." "We have one institution that invest $10 million and came through one of those platforms. If you've got a larger investor they'll do favors for you," Montgomery adds. "We were able to get Schwab and Fidelity essentially on day one." Though Bridgeway has moved into the ETF space, too, Montgomery went with the traditional mutual fund structure for BRGOX. It's hard to short inside of an ETF structure, Montgomery notes, and ETFs also can't be asset-capped and closed to new investors. "As a smaller company, we're always looking to innovate, so we're testing this out," Montgomery says, confirming that their goal is to raise $20 million in the mutual fund by the end of 2024. "We're at 15 right now ... At that rate, it would be a year-ish to closing." BRGOX is a series of Bridgeway Funds, Inc. The new fund's other service providers include: Bank of New York Mellon as administrator, custodian, fund accounting agent, and securities lending agent; BNY Mellon Investment Servicing (US) Inc. as transfer agent; Cohen & Company, Ltd. as independent accounting firm; ACA's Foreside Fund Services, LLC as distributor; and Stradley Ronon Stevens & Young LLP as counsel. Printed from: MFWire.com/story.asp?s=68154 Copyright 2024, InvestmentWires, Inc. All Rights Reserved |
