David B. Smith
Title: Senior Vice President & Chief Investment Officer,
Investment Management Group, Rockland Trust
Age: 46
Experience: 24 years
David Smith admits that he didn’t know Rockland Trust was in the money management business when he was job-hunting in 2003. He landed at the commercial bank “somewhat serendipitously” after being laid off from a startup group within Mellon and immediately settled into his role growing the bank’s wealth management business. This summer, Bright Rock Capital Management, a subsidiary of Rockland Trust, surpassed $200 million in assets under management. Smith recently sat down with Banker & Tradesman to talk about Bright Rock’s story.
Q: Can you tell me about the inception of Bright Rock?
A: We are very good at managing large cap money. It’s the core of our client portfolios and we do that for our larger clients on an individual security basis. The challenge that we faced was, if a client came to us with a large account and then they wanted their children to be clients of ours, and maybe the children’s account wasn’t very large yet.
We decided to build a large cap strategy so that we could provide that to all of the accounts we manage, essentially with the same strategy as a mutual fund format. Once we’d built the fund out, we decided we would allow others who might want to use our large cap capability for their clients, so the fund was made available on a variety of different platforms, including Fidelity, LPL, T Ameritrade, SEI and Merrill Lynch.
The bulk of the money comes from our own clientele. It’s been a very steady up, and to the right kind of growth, as we continue going forward, and it’s coming from a variety of different places, which is what we like to see. There are advisors on all those platforms and our own business, and it’s growing.
Q: You’ve mentioned that advisors “like the story” – so what is that story?
A: There are two components. One of them is quality, that’s in the name of the fund. It’s called the Bright Rock Quality Large Cap Fund. We have our own proprietary methodology for screening companies for quality, but we believe very strongly that investing in great companies is the way that you outperform over a market cycle, not trading stocks, so that’s a little different.
The other thing we do that’s very different is we equal weight all 10 economic sectors of the S&P 500, so every sector is very close to 10 percent. There will be 10 percent in health care companies, 10 percent in tech companies and so on, and that skews us from the S&P 500, which is capitalization weighted.
We’ve done an awful lot of work to understand how we could add value, and one of the things we discovered after 2008 is that if you equal weight all 10 economic sectors over a cycle, you outperform the S&P 500 with lower volatility. In a period like the late ’90s, when technology was going crazy, if we were stuck at 10 percent, we’re leaving money on the table, but when it blows up, we’re significantly outperforming, so over that period of boom and bust, we do a little better.
Q: What’s the next milestone? $300 million? And what are you doing to reach that point?
A: We’ll continue to do what we’re doing. The numbers have to be good. The good news is we’ve been at this now for a few years and we’ve got very high ratings on Morningstar. We actually had a five-star rating for a period of time; it’s now back to four stars, but that’s still very good. Our numbers recently have been good, too. As long as the performance stays up, opportunities will present themselves, and we also are looking at working with an outside sales force to help us raise assets.
So if the numbers stay good, we still get positive reviews from Morningstar and others, and we have a dedicated team out there selling this, we think our growth will accelerate. We may celebrate $300 million, but in my mind, the next milestone is $500 million.
David Smith’s Top Five Things To Do In the Summer:
- Spending time with friends and family at our Cape house.
- Fishing.
- Destination boating, including Martha’s Vineyard, Nantucket and the Elizabeth Islands.
- Enjoying frequent and varied views while walking the peninsula.
- Watching the sun rise and set.
