HighMark Capital Management is refocusing its investment strategy and looking outward for help.
The Los Angeles money manager, a subsidiary of San Francisco's UnionBanCalCorp, plans to farm out investment management duties for two mutual funds, the HighMark Growth and the HighMark Small Cap Value funds, to subadvisers.
HighMark, which has $20 billion under management ($11 billion is institutional), tapped Waddell & Reed Financial Inc. of Shawnee Mission, Kan., to manage the large-cap-growth fund, which had $314 million in assets, including institutional shares, through July 31, according to Financial Research Corp. of Boston.
LSV Asset Management of Norwalk, Conn., was hired to run the small-cap-value fund, which had $94.5 million in assets, including institutional shares, as of July 31, according to FRC.
During the first seven months of this year, the growth fund had $89.5 million in net outflows, says FRC, and the small-cap-value fund bled $62.8 million.
The changes have been approved by the HighMark board of trustees and are subject to approval by the Securities and Exchange Commission, says Cori Seiler, marketing and planning manager at HighMark.
Ms. Seiler says that the changes follow a review of investment strengths by company executives.
The areas of strength, the group decided, include money market, fixed-income, and large-cap and core-equity asset classes. Ms. Seiler says that some of the investment staff may be reallocated into the strategies that are staying in-house.
The changes also follow performance problems in the outsourced asset classes. The growth and small-cap-value teams will remain in place until the end of the month, she says. After that, the firm and the individual managers will decide if they fit in with other investment strategies at HighMark.
Ms. Seiler also says that the company would like to focus resources on bolstering distribution efforts in the institutional and retail channels.
The growth and small-cap-value portfolios have struggled in terms of performance. Through the first eight months of this year, the growth fund returned -37.32%, trailing the Russell 1000 Growth Index by about 14 percentage points. During the same period, the small-cap-value fund was down 1.82%, trailing the Russell 2000 Value Index, which gained 9.81%.
