Two Chicago investment firms are linking together in a partnership aimed at helping both expand – starting with unit investment trusts.
Fund manager Nuveen Asset Management and investment bank Incapital announced Monday a new stock-based unit investment trust developed with famous stock picker Robert C. Doll. The unit trust, which will debut in early 2014, is the first in a series of offerings to come from the partnership, Incapital's chief executive said on Monday.
Unit investment trusts are a twist on the traditional mutual fund. Shareholders own a pool of investments that the portfolio manager buys and holds until a termination date, when the trust is dissolved and the proceeds are paid out. The underlying securities are not actively traded.
Unit trusts have been regaining popularity. There was nearly $72 billion in 5,787 unit trusts in 2012, up from about $60 billion in 2011, according to the Investment Company Institute. That is the highest asset level the product has seen, in absolute terms, since 2000. Stock-based trusts draw the lion's share, or 92%, of new deposits.
In an interview, Incapital chief executive John Radtke said the unit trusts would be the first in a series of offerings by the partnership, which will take advantage of Nuveen's investment management expertise and Incapital's distribution network, as well as their trading and reporting website for issuers and broker-dealers.
“There's more opportunities to grow this pie in the future,” Mr. Radtke said. “Our customer base was looking to move away from fixed income to alternative asset classes including equities.”
Mr. Doll's career in the asset management industry has spanned more than three decades. The equity strategist retired from BlackRock Inc. last year after it was revealed that his proprietary quantitative methods actually were third-party models that he had tweaked and customized. Months later, he emerged in a new role at Nuveen.
Nuveen, which historically has focused on local government debt, has been working to develop its offerings across asset classes since some of its bond offerings became unredeemable when credit markets seized up in 2008. The firm, which merged with U.S. Bancorp's long-term asset business after a 2010 acquisition, managed $118 billion in assets as of Sept. 30.
Incapital is a boutique investment bank that specializes in bonds and complex debt products like structured notes — a hybrid derivative that might, for instance, combine the characteristics of a bond with those of an option to alter the risk-and-return profile of the investment.
The chairman of Incapital is Thomas S. Ricketts, the son of TD Ameritrade Inc. founder J. Joseph Ricketts. The family purchased the Chicago Cubs baseball franchise in! 2009. Like what you