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Orbitex to Pursue Growth Initiatives


The economy may be slowing, but Orbitex Management, the New York investment management division of Orbitex Financial Services Group of Zurich, Switzerland isn't showing any signs of slowing down its momentum.

The global group has plans for the new year to expand the three distinct segments of its U.S. business group through growth and acquisition. Those units include a proprietary mutual fund management unit, a new high-net-worth alternative investments unit and a non-proprietary fund administration and distribution unit. Orbitex distributes its funds through regional broker/dealers and wirehouses.

Room To Grow

With just $2 billion in assets under management and $10 billion in assets under administration through its back office unit, Orbitex has a lot of room for expansion. Moreover, the firm managed to attract $509 million in assets last year, but has suffered $51 million in net outflows through September, according to Financial Research Corp. of Boston.

Orbitex, which initially entered the U.S. fund industry in 1997 with four specialized proprietary funds, is now the advisor to a dozen funds, many of which have been acquired and merged into the Orbitex's group of funds.

In January 2002, Orbitex plans to launch its thirteenth mutual fund, the Orbitex Cazenove International Fund. The fund will be sub-advised by Cazenove Fund Management Ltd. of London, a wholly-owned subsidiary of Cazenove & Co., said Richard Stierwalt, CEO of Orbitex Financial Services.

Orbitex is also searching for acquisition targets to fuel its growth in the New Year. "We're always opportunistic. I think we will be looking for a fund group with $500 million to enhance our lineup," Stierwalt said.

Stierwalt said that Orbitex is open to adding entirely new sector specialties to its fund group, or augment existing funds with assets from similar funds. Stierwalt also envisions Orbitex expanding its fund-of-funds lineup by adding funds with different allocation models and risk/reward profiles.

A Pattern of Acquisitions

That growth through acquisition strategy follows its recent acquisition of the assets of three specialty funds managed by Monument Advisors of Bethesda, Md. Two of the funds were adopted, and then rebranded under the Orbitex moniker. The third fund was merged into the $400 million Orbitex Information-Technology & Communications Fund, the group's flagship fund.

All told, Stierwalt said his goal for the Orbitex group of funds is to have "several billion dollars in assets under management" five years from now, and as much as $30 billion under management and administration.

In addition to growing its proprietary fund group, Orbitex will be turning its attention to alternative asset classes, a new focus for the U.S.-based unit. Orbitex currently manages hedge funds outside of the U.S. and earlier this month introduced a guaranteed principal product in Zurich.

Stierwalt points to the increasing popularity of alternative investments in Europe, and expects that with markets in turmoil, U.S. investors' demand for alternative investments will also surge. He expects Orbitex to offer similar guaranteed principal and absolute return products, such as hedge funds, to U.S. investors in 2002.

Stepped Up Services

The third leg of the Orbitex stool includes pumping up its two-year-old fund administration division. In 1999, Orbitex purchased American Data Services of Hauppauge, N.Y., which provided back-office administrative services to predominantly smaller fund groups.

Two years and $3.5 million in technology upgrades later, Orbitex Fund Services division has expanded its service capability to mid-sized fund groups in the range of $100 million to $500 million in assets.