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In the asset management business, you’re only as good as your long-term performance, to paraphrase a cliche. For African American-owned money management firms, these words are even more true, especially as competition for new clients heats up.
In black enterprise’s inaugural overview of black-owned asset management companies, several executives note that firms boasting core portfolios with solid long-term performance have been able to leverage those results into attracting more clients. And African American money managers are aggressively seeking new clients, both public accounts, such as state pension funds, and private money, in the form of company 401(k) plans.
These firms have operated in-and continue to manage money in-a profitable albeit turbulent stock market. Judging by the stats, 1999 was a very good year. The tech-driven Nasdaq composite index, last year’s darling of institutional and retail investors alike, posted a record gain of 85.6%, while the Dow Jones industrial average, standard-bearer of the Old Economy, and the Standard & Poor’s 500-stock index returned 27.2% and 19.5%, respectively, for the year. And, taking a look at the first quarter of 2000, investors are in for a roller-coaster ride this year as well. As of early April, the volatile Nasdaq was up only 9.27%, while the equally unpredictable Dow was up a mere 3.35%. So investors treasure those money management firms that can make a boatload of dough in a topsy-turvy environment.
How some African American asset managers have approached this ultracompetitive landscape is as varied as their investment philosophies. Some are competing head-to-head with majority-owned money management firms and have won new clients based on their capabilities, rather than their status as minority-owned businesses. Others are expanding into areas not usually associated with asset management, such as small-business consulting, venture capital and real estate, in an attempt to build diverse financial services outfits. And still others are sticking to their knitting, regardless of whether their investment style has fallen out of favor, whether it’s a fixed-income or value-investing approach.
BEYOND ASSET MANAGEMENT
One executive looking to branch out is Maceo K. Sloan, chairman and CEO of NCM Capital Management Group (No. 2 on the be asset managers list), in Durham, North Carolina. At the end of 1999, NCM Capital had about $5.7 billion in assets under management, up from just under $5 billion in 1998. About 63% of NCM Capital’s institutional clients are private companies, while 37% are public clients. Just five years ago, that mix was reversed, Sloan says.
But Sloan has ambitions beyond traditional asset management. He seeks to transform Sloan Financial Group, the holding company for NCM Capital, into a diversified financial-services powerhouse, offering everything from a mutual fund family to small-business advice.
As part of his diversification thrust, Sloan launched Equity Capital Partners, a small-business consulting firm, last year. He created the firm to respond to myriad requests he received from minority entrepreneurs seeking advice on starting their own businesses. In return for offering advice and providing a comprehensive business plan, Equity Capital, in some cases, receives a stake in these fledgling companies.