As the fourth quarter of 2023 began, the leadership team of GLOBALT Investments LLC announced the acquisition of the firm from Synovus Financial to once again become an independently operated RIA. GLOBALT manages roughly $3 billion in assets across its range of equity and ETF portfolios, serving mainly institutions and advisors. Its suite of products includes the innovatETF Strategies brand, which has provided asset allocation solutions to clients in the form of ETF-only portfolios since 2003. Those were early days for such approaches, and GLOBALT was among the first movers in that area.
Synovus acquired GLOBALT in 2002 and will continue to provide access to its strategies to its clients.
VettaFi’s Heather Bell spoke with GLOBALT President William Roach about the transaction and what it means for the firm and how it operates as well as how diversity has been one of its key strengths for its 32 years of existence.
Roach is also a member of the Exchange Advisor Committee, a group of advisors that advise VettaFi on the content and curation of the Exchange conference.
A Pioneering Independent RIA
Can you tell me about GLOBALT and its origins?
When we started GLOBALT, the name stood for “global investment alternative,” because we were investing in US companies that derived a significant amount of their revenues from outside the United States as a growth strategy. It was a way for municipalities that felt that taking jobs out of the U.S. was a negative to connect with the global economy through U.S. companies that did a significant amount of business overseas. Our portfolios had north of 50% exposure to foreign revenues, when at the time going back to 1991, the composition of the S&P 500 was about 28%. That’s really how we got our start – selling our large-cap growth strategies to institutions.
We literally spent the 90s focusing on that strategy. Our client base, as we looked at 1999/2000, was roughly 85% institutional and 15% retail. We were managing portfolios of large- and mid-cap growth stocks. Our large-cap growth strategy was our flagship product that we still manage today. We realized that our retail client base was not very diversified. So we went to Ned Davis Research to help us build an asset allocation model from 2001 through 2003. We introduced our innovatETF strategies in 2003, which were purely ETF portfolios.
If I look back to that time, when we started those portfolios in 2003, the ETF space was very different. Back then in 2003, you’re looking at $150 billion and around 100 ETFs. We’re looking at something north of $7 trillion [in assets] and more than 3,000 ETFs [today].
We were early adopters in managing purely ETF portfolios. I think we were among the first 10 firms [to do that]. I’ve been trying to document how many were before us. However, there aren’t 10 firms with longer track records than we have, as we’ve got a 20-year track record in managing ETF portfolios now.
Synovus Added a Growth Strategy via GLOBALT
How does Synovus fit into this picture?
They acquired us in 2002. At the time, they were looking for a growth strategy to complement the value strategy that they were managing internally. [The acquisition] would allow them to offer their clientele both growth and value strategies. That was very opportunistic for us because we now had the Synovus brokers as a distribution channel for our ETF strategies.
How did you and the rest of the GLOBALT executive team decide to buy the firm from Synovus?
As you look at the current market environment and the events around the banks that went under on the West Coast, this is an environment in which there’s increased scrutiny on regional banks. And if you think about our business, those issues around regional banks don’t impact us directly. [The deal] was an opportunity for both firms to focus on their core businesses.
There was a mutual understanding that from a timing standpoint – given the regulatory environment and given the environment really doesn’t really directly impact our business as an independent RIA – there was an opportunity for us to continue to serve the Synovus clients as a third-party manager, as opposed to being a part of the bank. We’re retaining our relationships there, and we’ve got north of $2 billion in assets with Synovus. The deal allows us to focus on some of the other banks. It also allows us to focus on entities that didn’t necessarily see being part of a bank to be a positive for an investment management firm.
Pluses & Minuses of Being Part of a Bank
There’s always been a sense that a bank, which has a different perspective, won’t pay investment management professionals at the level that [reflects compensation on] the open market. Second, just the stigma of being part of a bank can be a negative for investors and consultants. Consultants sometimes don’t necessarily feel like you have full control over your business when you’re part of a publicly traded bank.
We’ve spent 21 years as part of Synovus, and we have really helped those advisors go from being transaction-oriented to more managed money. That’s led to a very strong relationship with Synovus and their brokerage operation.
This acquisition opens the doors for us to work more with a regional bank partner that we access through the Envestnet platform and for whom we manage about $104 million in assets [for example]. It also allows us to work with some of the other banks that consider Synovus a competitor. This will open up the door for a lot of advisors who really feel that way and are willing to use a third-party manager as part of the investment solutions that they offer their clients.
Diversity Is a GLOBALT Cornerstone
Do you have any other thoughts about GLOBALT’s new status?
I am so excited to be independent because we’re going back to really the roots that we came from. We were an independent RIA for 11 years before we became a part of the bank. We were a woman-owned firm, because my predecessor, Angela Allen, was one of the founders when it started in 1991. With this acquisition, 100% of my team is going to have ownership of the firm. Of the 19 people on my team, there are 11 African Americans and 10 women. It’s a very diverse organization. And I would consider diversity really being a pillar of the foundation that we built when we started.
I [started] in this business when most of these large investment firms and investment banks were all white males. And they would always say “We can’t find them [meaning women and minorities].” My question is, where the hell are you looking? With my team, we have enough minority ownership at 51% to be considered a minority firm. But we also have a significant amount of female ownership in the business as well.
This is an opportunity for all of my team to be owners and to build some wealth. It’s an opportunity to be a minority-owned firm, and I believe that there are only a handful. I’m not sure if there are any African-American firms in the multi-asset class area based on the ETF side.
Diversity is important. It’s important to my team, and I think it’s important to my clients. This is an organization for which diversity really is a cornerstone. It’s part of the fabric of our business, and that’s intentional. It allows us to have a broader thought process around the decisions we make for our clients.
Operating in Uncertain Financial Environments
“Uncertain” seems to be the buzzword that best describes market conditions in the economy right now. Is GLOBALT doing anything differently with the asset allocation portfolios that it manages that maybe it wasn’t doing a year ago?
We started off managing these portfolios to be diversified and risk-controlled and have some downside protection. We normally have 16 to 20 ETFs in a portfolio, and they are diversified across asset classes and subclasses. I would say we are conservatively positioned now.
We have a pretty even exposure on the equity side to growth and value. It’s a little more skewed to the growth side because the reality is that’s what’s working in 2023 – large-cap growth. Not small cap, not mid-cap. We are at the bare minimum exposure to international. And we’ve got good, solid exposure to the bond side of the equation in the five risk models that we execute for our clients. They run from defensive to conservative to balanced to growth to high growth.
Our strategies are dynamic. That includes a combination of strategic and tactical asset allocation. In these kinds of environments, it allows us to be a little more tactical, to try to take advantage of short-term opportunities in the market. It also allows us to be nimble and opportunistic on behalf of our clients. We can make sure that there’s a good strategic approach for each of our clients and their respective risk categories. We take advantage of short-term opportunities in the market as there are displacements in different areas.
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