By Yael Bizouati
Redwood Investments, an equity manager founded in 2004 by Putnam Investments veterans, has expanded its investment and marketing staff, most notably by hiring State Street Global Markets’ head of institutional sales to the newly created position of head of sales and marketing, in an effort to grow its asset base.
Jennifer Silver, Redwood founding member and managing partner, says that the decision to expand was triggered by the fact that the firm has reached the $500 million milestone in terms of assets under management. Of this, $451 million are in institutional assets, according to the eVestment Alliance database.
She says that now that the Newton, Mass.-based firm has successfully executed its five-year business plan and forecasted the next five years, it became necessary to expand the team, especially in the marketing area.
“Over the next five years, we want to have several billions in assets under management, and we want to make sure we have the infrastructure and human capital in place,” Silver says.
Redwood got a boost in December 2008 from the Manager Development Program of the California Public Employees Retirement System, which gave the small manager a $200 million mandate. The MDP, which CalPERS established in 2000, invests in emerging money managers and targets equity and fixed income firms with less than $2 billion under management.
A spokesperson for CalPERS says that the program now involves about 20 managers across two groups. The original program had a defined investment period and is now closed to new investments; it provided mandates to emerging equity managers as well as venture capital in exchange for a significant but minority equity stake. The follow-on program is the MDP II, created with an open-ended investment period without the equity stake, which allows investments to be made opportunistically depending on current market conditions.
CalPERS owns 6% of Redwood, Silver says.
While the CalPERS connection has helped the firm get established, Redwood is now looking beyond that. “Most of our business is in the emerging manager space, and that’s great as it will continue to grow. But we also want to expand into mainstream assignments with consultants,” Silver says. “We couldn’t spend time building those relationships but now that we reached critical mass in terms of size and performance history, it’s time to start marketing there.” She says the firm wants to branch out to high-net-worth advisors as well as go after sub-advisory relationships.
She says the firm hired people they knew well and who would be a good fit for the “entrepreneurial boutique environment.”
John Schwartz joined as head of marketing and client service from State Street Global Markets, which is State Street’s research, trading and securities lending arm. At that firm, he most recently was head of North American institutional equity sales.
Silver says that Schwartz will lead Redwood’s sales, marketing and client service efforts and focus on broadening existing relationships. He will also develop and execute strategies to develop relationships with the broker-dealer and sub-advised mutual fund channels.
At State Street, Schwartz was responsible for the equity sales/trading, research sales and commission management businesses. Prior to State Street, he worked at Goldman Sachs for 15 years in Boston, New York and London.
A spokesperson for State Street says Schwartz left in May and his responsibilities have been taken over by other members of the team.
In another recent hire at Redwood, Tony Sutton joined from Putnam Investments as a portfolio manager and analyst. He’s now co-portfolio manager for Redwood’s smid-cap growth product and an analyst for the large-cap core and large-cap growth strategies. At Putnam, Sutton was a managing director. A spokesperson for Putnam says that Sutton left the firm in April. Pam Gao replaced him. And Yuda Goodman has joined Redwood as an operations and trading support associate. Prior to joining Redwood, Goodman served in an elite intelligence unit of the Israel Defense Forces.
Silver says that the firm has been outsourcing its back office to Compass Institutional Marketing since it launched. “It’s better to hire experts in their own areas and that can stay at the forefront of technology and stay cutting edge,” she says. She says that she thinks the firm’s investment style – especially its large-cap core and growth products – is going to come back in favor. “There are signs that markets are returning to paying attention to valuation and quality,” Silver says.