Deals & People March 6, 2013

ISC Group Announces New Ownership Group

 

Institutional Securities Corporation (ISC) has been acquired by a team led by Scott A. Hayes, the firm’s executive vice president.

 

 

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The terms of the deal were not disclosed. Hayes will assume the role of president and chief executive, and Terry L. Hill, ISC’s founder and selling owner, will continue in a consultative capacity for a minimum of five years, ensuring a smooth transition.

Some negative trends in the industry—“specifically the increased costs of running compliance programs and shrinking margins due to fee compression and high rep payouts”—have resulted in a contraction of the independent broker/dealer market, Hayes told PLANADVISER.

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However, Hayes feels there are still opportunities for independent firms like ISC that are willing to make the effort and adapt to a changing regulatory environment. “I do not have any specific regulations in mind, but as the firm’s CCO, I can attest that there is seemingly always something new and potentially onerous on the horizon for the small, independent firms like ours,” he said.

Hayes said that he intends to lead the firm using the same value-added perspectives that Hill has instilled in him. “Our advisers can choose to clear their business with anyone,” Hayes said. “They choose ISC because we view them as our business partners.”

Plans include ramping up qualified retirement plan assets under management through the firm’s fiduciary services, building assets on the firm’s managed platforms, expanding product and service offerings to clients, and selectively expanding the firm’s adviser base.

“There are a lot of things that we can do for our advisers that don’t work inside the large firm model,” Hayes said. “We don’t require our advisers to fit in our box, but, rather, we work with them to help them achieve their objectives based on their own business models.”

Hayes joined ISC in 1997. He is a CFA charterholder, and holds a bachelor’s degree from Baylor University and a master’s of business administration from Southern Methodist University. He is the immediate past president of the National Tax Sheltered Accounts Association (NTSAA) and serves on the board of directors of the American Society for Pension Professionals and Actuaries (ASPPA).

Institutional Securities Corporation is a broker/dealer and registered investment adviser with headquarters in Dallas.

The Markets March 6, 2013

Mutual Funds, ETFs Reach New Highs in January

January mutual fund flows of $86.6 billion were record-breaking, and exchange-traded fund (ETF) assets reached a new high of $1.4 trillion at the end of the month.
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Data from Cerulli Associates shows ETF assets have increased each month since October. Since January 2012, when assets totaled $1.1 trillion, ETFs expanded by 23.9% in one year.   

Overall ETF flows were positive during the month with $28.1 billion, but a step down from December when total flows were $38.1 billion. Equity asset classes ran the monthly flow leader board with international stock, sector stock, and U.S. stock reigning in top flows. Balanced ETFs experienced the most asset growth among the asset classes with an increase of 14.9% in January.   

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Diversified emerging markets drove ETF category inflows in January with $6 billion. International stock funds benefited from their success with the highest asset class flow during the month, $15.1 billion. U.S. stock ETF flows slowed in January ($4.3 billion), after garnering $24.3 billion in December. Despite healthy 2012 total flows and five consecutive months of inflows, commodities ETFs dropped into outflows (-$800 million) in January. After three consecutive months of outflows totaling -$1.6 billion, alternatives switched into positive flows for the month with $9.5 million.

(Cont’d…)

Among mutual funds, all asset classes gathered positive flows in January. Growing by 5.3%, U.S. stock increased assets the most among all classes for the month, and commodities followed with 4.2%. After 20 consecutive months of net redemptions, U.S. stock mutual funds secured monthly inflows in January ($15.5 billion). Equity funds almost surpassed fixed-income fund flows during the month with $37.8 billion and $32.8 billion, respectively.  

Despite strong inflows for most taxable bond funds in January, the government bond fund categories experienced net redemptions. Intermediate-term bond funds continue their dominance, attracting another $10.5 billion in net flows in January. If this trend continues, intermediate-term bond funds ($1.09 trillion) could surpass large-cap blend funds ($1.22 trillion) as the largest money market category by assets, Cerulli said.   

Passive and active mutual funds garnered strong inflows in January with $65.1 billion and $21.4 billion, respectively. Nearly half (49.6%) of January passive fund flows were driven by funds in the U.S. stock asset class. Large-cap blend ($6.9 billion) and intermediate-term bond ($4.4 billion) categories captured the most passive fund net flows for January; incidentally, these categories are also the largest. Among active funds, intermediate-term bond ($6.1 billion) and diversified emerging markets ($4.8 billion) were the leading categories by net flows in January.  

Data is from the February 2013 Issue of “The Cerulli Edge - U.S. Monthly Product Trends.” Information about purchasing the report is here.

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