Dutch Trick or Treat

Placido Polanco of the Detroit Tigers turned in a memorable effort in an unmemorable World Series. Not for what he accomplished though. For stinking up the joint.

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ING Investment Management’s fundamental equity team might be the Placido Polanco of the buyside.  They stink too.

ING’s Dutch parent has done an admirable job establishing a beachhead in the U.S. through its ubiquitous ING Direct online bank and branding via a massive advertising budget that includes this week’s NYC marathon.  Deep pockets indeed.

But ING Funds domestic offerings are a bit uneven. The ING Partners Fund family has assembled an all-star roster of sub-advisory relationships. The term “best of breed” usually provokes the involuntary gag reflex in us, but in this case it might be deserved.  These outside managers are for the most part legit.

While ING’s quantitative equity products also seem to pass muster despite recent personnel turnover and client defections, ING’s NYC-based fundamental equity team seem to be giving their fund’s investors more of a trick than a treat. 

After a spate of acquisitions and the subsequent integration efforts that combined the investment professionals of the Pilgrim Funds, Furman Selz and Aetna among others, you are left with what unhappy investors could only describe as a work in progress. Although ING’s newly-arrived small cap team are getting the job done, the larger-cap offerings that constitute the bulk of the assets run by this motley-NYC based-crue are posting bottom quartile year-to-date numbers with no turnaround in sight.

The firm’s Large Cap Core Strategy, offered via managed account channels, has outperformed the S&P 500 only 4-5 quarters over the last 25.  Their Growth, Value, International and Fundamental Research mutual fund offerings are averaging 80th percentile showings year to date too.

But a new ING strategy offering is attracting the loudest bronx cheer.  The Wall Street Journal recently took them to task as their Head of Equity Research makes a feeble attempt to morph into a long/short manager....

Mutual funds are starting to experiment with a risky investment strategy borrowed from the high flying world of hedge funds. The strategy, known by the unusual moniker “130/30,” is a way to place bets that stock prices will fall, in hopes of profiting from those declines. Betting on falling prices is a practice that mutual funds traditionally shy away from, although there have been a handful that have tried variations on it. But now, as hedge funds and other lightly regulated investments attract piles of investor money, more funds are trying to borrow more explicitly from their playbook.

ING declined to comment on the fund, since it’s a new strategy and managers are still fine-tuning it. (WSJ)

Fine-Tuning?

This fund is probably best suited to investors willing to give a marginal long-only manager on the job training in the vastly different long/short world...a dangerous proposition at best.

Investors in bed with ING’s Fundamental Equity team are likely crying Uncle, after all he could probably do a better job…

We are placing these fellas on “Double Secret Probation”. We will keep you updated.

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