Peter Mouatt’s Adam Smith to RE for itself and others

Peter Mouatt’s Adam Smith Asset Management is setting up its own responsible entity, Yield Capital Investors, as a conduit to the retail market for its own funds and even those of other managers.

The boutique, established by ING and Macquarie veteran Mouatt in 2003, currently manages $450 million in wholesale mandates. Tim Gapes, Adam Smith AM chief operating officer, said the manager had established a responsible entity, Yield Capital Investors, to provide retail investors with entry points into the manager’s micro cap, small cap and broad market funds. “We’re setting up the bank account now and finalising product disclosure statements. And we’re trying to get a BDM on board,” Gapes said. Zenith and Morningstar have assessed the funds, but are yet to release ratings, and Lonsec is scheduled to visit the Adam Smith AM offices next month. Gapes said the manager had narrowed its search for a retail business development hire down to a shortlist. “We don’t want to be on every platform. We want to target the more profitable segments of the market.” He said the retail market was appealing since it provided more points of entry than the institutional sector. “In wholesale you’ve got a small number of asset consultants as gatekeepers. It can be a risky business: these decision-makers control a lot of money and one of them can influence up to a third of your business. “Retail money isn’t as lumpy and it’s stickier.” The manager’s funds suffered in February due to their overweight bearing on financials and lack of resources holdings. While the past month’s figures had not been finalised, Gapes said the Adam Smith AM micro caps fund had beaten its small ordinaries index by 8.7 per cent each year since its November 2005 inception, and the small cap fund had returned 4.6 per cent each year over the same benchmark since its November 2003 launch. Adam Smith AM would focus on marketing the micro and small cap funds, while retail manager Great Southern would roll out the broad market fund, Gapes said. He said that, in time, Yield Capital Investors would aim to bring funds from other managers onto its menu, and that the boutique had also seeded a property securities fund internally and was building its track record. “Yield Capital can be a brand. It doesn’t just have to hold Adam Smith products once we’ve got the retail linkages in place.” But the responsible entity would not seek extensive ownership positions in these products. “We’d be happy to strike a distribution arrangement; we’re not looking for a big equity stakes in managers.”