Fund Executive Takes Dot-Com Plunge
October 16, 2000
Jim Atkinson says he took a risk last month when he resigned as managing director of Investec Asset Management US Limited of Pasadena, Calif., to become the president of MaxFunds.com, an eight month-old Internet start up.
While Atkinson's reason might be questioned, he sees the move as a calculated risk, but one that has tremendous potential and, more importantly, one that fits his character. Still, the company he left was, by comparison to the world of Internet start ups, a stable place. Although the firm has only $500 million in assets under management, its parent company, based in Johannesburg, South Africa has $25 billion and 90 funds worldwide.
"I admit fully that this is a bit of a career risk, but it's one that I'm comfortable with," Atkinson said. "With the Internet, everything is a risk. There's talk of Amazon not being able to make it now. That may be overstating the case, but I believe a lot of money is going to be made on the Internet and I don't think anyone can figure out who, how or what because it changes so quickly and the competition is so fierce. It's a very dynamic environment."
MaxFunds.com is a safe bet, according to Atkinson. The company, based in Ann Arbor, Mich., launched its website in February and began ranking small and new mutual funds. The firm has earned a reputation for taking a novel approach by using original criteria to measure and evaluate new and small funds.
For those who know him, the move makes perfect sense, Atkinson said.
"If you had the opportunity to work with me for the past six or seven years, I was always pushing and trying to be on the cutting edge," he said. "And I think a lot of my colleagues just thought that I was moving a little bit closer to the cutting edge and going where my intellectual interest was."
The firm's move to offer model portfolios or synthetic funds clinched Atkinson's decision to join MaxFunds.com, Atkinson said. The firm launched its first twelve baskets of securities on its website two weeks ago. The portfolios are selected and run by a professional manager. For a small subscription fee, members will be allowed to log on to a site that tracks the portfolio's performance and the manager's changes to the portfolio will be sent via e-mail. Subscribers must execute their own trades with a broker of their choice, Atkinson says.
MaxFunds.com's synthetic funds are the cutting edge Atkinson was looking for. While the products will not rival mutual funds' popularity any time soon, they are a better product in terms of tax efficiency and customization, Atkinson said. Moreover, he predicted that nearly every brokerage will offer a platform that will allow basket-trading capabilities within six months.
Atkinson also based his decision on the direction in which he sees the fund industry moving. Smaller companies are beginning to have a tough time winning new business, he said.
"At the margins, the mutual fund industry is starting to struggle, notwithstanding the success it has had," he said. "You might start to see, because of this difficulty at the margins for these fund companies, the long awaited, much anticipated but never arriving consolidation. You know what's happening in the fund industry. Just a few winners are grabbing most of the money and the business prospects for most players right now is not good. It's not terrible, but it's not good. And this is during a bull market."
While he declined to disclose a figure, Atkinson said that he was given a large stake in the firm. Another factor that influenced his decision was the firm's willingness to move its headquarters from Ann Arbor to Los Angeles, where Atkinson lives.
In Atkinson, MaxFunds.com gains someone with considerable industry experience as well as knowledge of selling financial products on the Internet. While the firm has made novelty one of its trademarks, in order to successfully launch basket portfolios, it needed someone like Atkinson who has been in the fund industry since the late 70's, according to Jonas Ferris, CEO and co-founder of MaxFunds.com.
"He has a lot of experience launching mutual funds, specifically ones that could have almost been synthetic funds," he said. "So that is where his background really comes into play for us. We had the mutual fund rating site and the content site but if we're going to be moving into these mutual fund alternatives, that's where he has a lot of interest and knowledge and experience."
Atkinson developed a strong rapport with Ferris because he had always embraced the no-holds barred marketing strategy concept the website embodies, Atkinson said.
"If you came to me with an interesting Internet marketing plan, my attitude is basically, We will try anything,'" Atkinson said. "One of the things that drives you to the cutting edge is the ability to experiment and I happened to like the things that MaxFunds was doing."
At 43, Atkinson is older than his 16 colleagues at MaxFunds.com by 13 years. But his desire to work on the cutting edge compensates for what might otherwise be a generation gap, Ferris said.
"Although he's not John Bogle, he is getting up there," Ferris said.