Sunday, June 23, 2024

Picking winners

It’s not Boston, Manhattan or Palm Beach, but North Carolina is an important player in the wealth-management business. For proof, check out the adjoining list of the 33 investment groups based in the state that each manage at least $1.2 billion, based on data compiled by BrightScope Inc., a San Diego-based research firm. The assets under management come from reports filed with the Securities and Exchange Commission since Jan. 1.

While many of the companies on the list invest in traditional stocks and fixed-income securities, the list also includes a few private-equity groups that put money into a limited number of private companies and several hedge funds specializing in “alternative investments.” It doesn’t track thousands of financial consultants who live in North Carolina and work for companies that are based in other states. Assets managed by brokers at local Merrill Lynch or Wells Fargo Advisors offices, for example, are not included.

With rare exceptions, the companies on the list keep a low profile. For one reason, regulations often prohibit active marketing to the public. Most funds’ target market is wealthy families, pension funds and other institutional investors. It can be a lucrative business with fees varying based on account size and type of investments. The companies manage a combined $490 billion in assets and collect tens of millions of dollars in annual fees.

The principal challenge is to outperform peers  and indices, thereby justifying the fees. But that hasn’t worked out well in recent years for many wealth managers, including hedge funds. Individual firms are not required by regulators to report their results, but a gauge of hedge-fund performance, the HFRI Index, lagged the S&P 500 by 3% annually over 10 years through February, according to Bloomberg. Investment funds that buy big-company stocks also have struggled — about 85% of actively managed large cap equity funds trailed the S&P 500 over the last five years, according to S&P Dow Jones indices.

None of which suggests that these and other wealth managers haven’t shot the lights out, or won’t do so in the future, with superb investment decisions. If they make the right calls, North Carolina’s wealth-management trade will gain ground on the industry’s meccas.

To see a PDF of the companies listed in the chart please click here.

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David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at

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