(Repeats story published earlier on March 24, no changes)
By David Randall
NEW YORK, March 24 Little-known Thrivent
Financial, a Minneapolis-based asset manager that offers
financial services to Lutherans, is hoping its recent streak of
outperformance will make it stand apart at a time when steep
investor outflows are prompting a wave of mergers throughout the
mutual fund industry.
The firm, which collectively manages $15 billion across its
23 funds, received its second consecutive Lipper Award for best
overall company in the small company division, and its third
consecutive win in the Mixed Assets, Small Company division, at
an award ceremony Thursday night in New York.
While other firms struggle to retain assets as more
investors opt for low-priced index funds and exchange-traded
funds, Thrivent has received net inflows of $57 million since
the beginning of 2017, making it one of the few bright spots in
the active management industry.
Its challenge now is how to grow outside its base of current
customers, mainly Christians in the U.S. Upper Midwest who have
average account balances of $38,000 invested with the firm.
Unlike other religiously affiliated mutual fund firms,
Thrivent's funds do not feature any screens that prevent it from
investing in companies in industries like alcohol or firearms,
making its funds more directly comparable with secular firms
that offer funds at much lower costs.
"We are never going to be competitive with BlackRock
or Vanguard on price", said David Royal, president of Thrivent
Mutual Funds. "Rich people can afford to be in a hedge fund, but
regular people shouldn't be forced into index product they may
not understand," he said.
Overall, Thrivent gives its managers wide leeway to invest
as they see fit. "There’s not a Thrivent way of managing money
that we pass out," said David Francis, vice president of
The Thrivent Mid Cap Stock fund, its
best-performing fund, is up 30.8 percent over the last year, and
up an average of 11.4 percent over the last three years, putting
it among the best U.S. focused mid-cap funds. Its largest
holdings include regional bank Zions Bancorp, Southwest Airlines
Co, and Applied Materials Inc.
The Thrivent Large Cap Value fund, meanwhile, is
up 20.1 percent over the last year, in part because of large
positions in Cisco Systems Inc, Microsoft Corp and Citigroup
Last March, the firm began airing its first ever television
commercials, attacking the notion of index-based investing by
depicting robots in suits mismanaging money. The long bull
market in U.S. stocks, which began in 2009, has falsely
convinced investors that active management is unnecessary, Royal
said, adding that "at some point it will flip, and I worry what
happens to the average investor then."
Investors in some of Thrivent's funds pay above average
annual fees. Investors in its Thrivent Large Cap fund, for
instance, will pay $1.20 per $100 invested, compared with the
$0.14 per $100 invested in the Vanguard 500 Index fund. The
Thrivent fund has lagged the S&P 500 over the last 1 and 3
The firm's religious affiliation is an asset as it grows
because its customers may be less likely to pull dollars from a
fund that is underperforming, said Todd Rosenbluth, director of
ETF and mutual fund research at CFRA. That sort of sticky
customer base may make it an acquisition target, he said.
"Asset managers that can retain assets are particularly
appealing in this environment when traditional products are
facing fee compression," Rosenbluth said.
Eaton Vance Corp, for instance, acquired $12.3
billion Calvert Investment Management in 2016, in large part
because of the firm's long history of socially responsible
investing. The terms were not disclosed.
Royal said that Thrivent has no plans to sell itself.
"We would not be a seller, we would be a buyer," he said.
"Certainly there's not any interest around here in selling our
funds business. We are here to grow it."
(Reporting by David Randall; Editing by Jennifer Ablan and