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Portfolio > Alternative Investments > Hedge Funds

New Opportunities for Lockwood Financial

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Last fall’s sale of Lockwood Financial Group to Bank of New York Company is already paying off in new offerings for the Malvern, Pennsylvania-based separately managed account provider, says Lockwood Chairman Leonard A. (Len) Reinhart.

In an interview with Investment Advisor during the Money Management Institute’s annual meeting in New York Mar. 31, Reinhart disclosed that Lockwood had just added to its separate account platform a registered hedge fund of funds run by BONY subsidiary Ivy Asset Management. The no-load fund for high-net-worth investors will be aimed at fee-based advisors, who comprise 40% of Lockwood’s client roster, Reinhart said. It invests in 30 to 40 individual hedge funds and has had a low correlation to stock market returns. In about nine months, Reinhart expects to add a long-short hedge fund product. Then, “there will be other” hedge fund products on the platform down the road. “We are going to tread softly.” he said, but added that, “eventually, we want to have a universe of them.”

Reinhart is adding two other Bank of New York products to Lockwood’s menu. In addition to residential mortgages, Lockwood will also offer loans collateralized by securities in an investor’s portfolio. Reinhart says he sees strong demand for collateralized lending products among fee-based CPA firms.

The Lockwood chairman expects BONY’s recent purchase of Pershing to bring a flood of new business to his doors. Even before the takeover of the Jersey City, New Jersey, clearing firm has closed, Lockwood has taken over 38 employees of ING Furman Selz Capital Management as part of a move by the fund manager to outsource some of its operations. Reinhart hopes that the Pershing deal will allow Lockwood to simplify managed account programs by allowing reps and asset managers alike to use fewer custodians. “Pershing has 40,000 reps [that are affiliated with clearing firm clients] and 500 broker/dealers,” he says. “That’s a huge universe for us to play in.”

Reinhart reported that Lockwood’s assets under management now total about $7.5 billion, down from some $9 billion at the stock market’s peak.


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