A $100 million manager for $1,000: Ariel and Lincoln Capital set up fund for individuals and institutions

Black Enterprise, Nov, 1995 by Frank McCoy

If you had $100 million to invest, you could have it managed by Lincoln Capital Management, the majority-owned firm that accepts nothing less than that amount. But thanks to John W. Rogers Jr. and his Ariel Capital Management Inc., individual investors with as little as $1,000, and institutional investors with only $1 million, can put Lincoln's investment expertise to work for them.

The secret is the recently formed Ariel Premier Bond Fund, the first fixed-income fund provided by a black-owned firm. While Ariel runs the fund and distributes its shares, Lincoln makes the investment decisions.

Everyone knows there are no guarantees when it comes to investing, but Lincoln's management style, roster of clients and track record should be comforting.

Lincoln manages over $30 billion for more than 90 clients. Of that, $17.5 billion is in three fixed-income portfolios, whose investors include New York City Public Employees Retirement System, Comsat and IBM.

Alexander B. Knowles, a Lincoln vice president, says Lincoln's cumulative return on investment for its fixed-income portfolios over the past five years has been 8.26%, significantly above the 7.66% return scored by similar funds in the Lehman Brothers Aggregate Index.

"Lincoln has been a top performer since it was established," says Philip Schneider, a director at Chicago-based Wyatt Investment Consulting. "Lincoln," he adds, "focuses exclusively on high-quality corporate fixed-income notes, mortgages and Treasuries." Schneider says such discipline is unusual even among top-ranked fixed-income money managers. He says most of them at times invest in lower-quality corporate or foreign bonds, "or try using derivatives."

Ariel's Rogers says the joint venture will "make Lincoln's expertise available to the individual investor, charity and the 401 (k) plan of a small or midsize business."

Rogers formed Ariel Capital Management a year ago when it split off from the Bethesda, Md.-based Calvert Group (see "Fund's Down, Not Out," Moneywise, Feb. 1995). Ariel is believed to be the first African American-owned equity mutual fund company.

The no-load, open-end Premier Fund will balance Ariel's equity side, the Ariel Growth and Ariel Appreciation Funds, which have $260 million invested.

With the formation of the bond fund, the 36-year-old Rogers is pioneering again by creating an African American family of mutual funds for individuals and institutions.

Rogers will market Lincoln's active fixed-income portfolio to Ariel's clients. The strategy is to use Lincoln's high-quality portfolio to maximize total return through income and capital appreciation.

Wyatt's Schneider says that the attraction of the joint venture is that Ariel and Lincoln will gain access to a broader range of investors. Individuals will "bank on Rogers' involvement, while institutions will bank on Lincoln's expertise."

To obtain a prospectus and additional information on the Ariel Premier Bond Fund, call 1-800-29-ARIEL.

RELATED ARTICLE: FYI

When it comes to leaving money to their children, most women don't want to be accused of favoritism. The vast majority of women 45 and over--78%, in fact--say that they plan to divide their estate equally among their children, regardless of whether they think one deserves more than another.

A survey by American Express Financial Advisors shows that only 8% of the 605 women surveyed said that they planned to distribute their wealth to their children on the basis of merit, and even fewer, 6%, on the basis of need.

Most women have done some planning for their estates. The survey shows that 74% have wills and 63% have discussed estate planning with their children.

Asked whether the results for African American women were any different from that of while women, a spokesperson for American Express Financial Advisors said there were too few African Americans in the survey to draw meaningful conclusions about any differences.