Ategenos Capital, an outsourced investment advisory firm launched last month by several former executives at Brinker Capital, has brought on its first outside investor, with Envestnet taking a minority stake in the firm.
In conjunction with the investment, Ategenos also launched its suite of discretionary investment management offerings, to be distributed on the Envestnet platform initially.
Brendan McConnell, chief operating officer, said the firm will not be exclusive to Envestnet, and will look to distribute on other marketplaces as well. The executives detailed the investment offerings for the first time since Ategenos’ registration with the Securities and Exchange Commission was approved, in an exclusive interview with WealthManagement.com.
Ategenos was launched in May by several former executives at Brinker Capital, the turnkey asset management platform acquired by Orion in 2020, including McConnell, Jason Moore, and Brinker co-founder John Coyne. The executives have been clear that Ategenos will not be a TAMP, but rather, distribute its strategies on third-party platforms.
The investment management is led by co-chief investment officers Jeff Raupp and Amy Magnotta, who worked together at Brinker for 15 years managing discretionary portfolios.
“Jeff and I have extensive experience running multi-asset-class discretionary portfolios, so we’re bringing that here to Ategenos,” Magnotta said. “We’re able to, on the discretionary side, really build portfolios that are broadly diversified, that are dynamic, so for us that means we’re going to be active from an asset allocation perspective. But we’re also going to deliver for clients the outcomes they expect.”
The offerings will start with a minimum investment of $10,000 for Ategenos Portfolios, a suite of model portfolios using third-party ETFs and mutual funds. Ategenos Access Portfolios, which will have a $500,000 minimum investment, will have the same investment philosophy and process as Ategenos Portfolios, but more flexibility in what clients can invest in. These portfolios will be structured as unified managed accounts and will include separately managed accounts as well as ETFs.
Both offerings will cover an array of asset classes, including U.S. equities, international equities, fixed income and alternatives. Magnotta said the firm will be opportunistic on its use of alternatives, and they will use only liquid alts, such as relative value fixed income, long/short equity, infrastructure and natural resources.
Raupp said the portfolios will include a blend of active and passive exposures, and they’ll aim to get beta exposure in the cheapest way possible.
Ategenos will charge a 10 basis point management fee for those two offerings, and investors will also pay the internal expenses, which can range from 25 to 45 basis points.
The firm has also launched a private wealth offering for accounts with $1 million or more in assets, an initiative led by Todd Cole, head of private wealth. Under this offering, Ategenos will build customized UMA portfolios for high-net-worth clients and provide a dedicated portfolio manager for ongoing advisor support. These UMAs will be made up of SMAs primarily, but they may also utilize ETFs and mutual funds. They’ll also be able to use less liquid alternatives.
“You are able to customize the portfolios based on that particular client’s need—if they’re income seeking or more long-term growth seeking—whatever their specific goals may be,” Cole said.
“One of the things that’s exciting about working with Envestnet is access to the various exchanges they have, including the Alternatives Exchange,” Cole said. “So there’s going to be the opportunity to use private equity, hedge funds, structured notes, things of that nature, which we’re starting to see more and more in the high-net-worth space.”
Ategenos will provide the portfolio construction within this offering, but also sales support and ongoing relationship management.
“What we’re trying to do is really act as an extension of their practice in many ways and be a resource that they can really lean on in the area of investment management expertise, portfolio positioning, being an extra voice that they can then bring to their client,” Cole added.
Ategenos will help advisors on the front end when working with prospective clients, such as diagnosing clients’ existing holdings, finding ways to improve upon tax efficiency and asset allocation. They will also help through the client onboarding process. Then, on the back end, the advisor’s dedicated portfolio manager is available to participate in client meetings, if need be, to discuss the markets or the performance of the portfolios.
“More and more you’re starting to see advisors outsource,” Cole said. “They’re wanting to spend more time on the financial planning, relationship building aspect of their business, less time on the portfolio management. They’re seeing the value in the partnership because of the economies of scale that they can bring to their practice.”
Ategenos will also leverage Envestnet’s outsourced consulting technology platform for HNW advisors, which allows the manager to get visibility into those clients and provide them with ongoing management and support.
“It allows for asset managers who are looking to offer this high-net-worth outsourced consulting service to really be integrated into the specific client account off the Envestnet platform,” McConnell said. “That allows us as a manager to log into a manager portal, sit alongside the advisor in building the portfolio and the proposal process and be fully integrated into that process, along with the then-ongoing management of the accounts.”
The firm has direct indexing tools available as part of the portfolio, and they will use that strategy within the private wealth offering if it makes sense for a particular client situation.
The pricing for the private wealth offering will be negotiated on a firm-by-firm basis.
In addition to the investment management capabilities, Ategenos also supports international financial institutions in establishing operations in the U.S., via its Global Managed Account Program, and provides OCIO services to RIAs and asset management firms.