- MSD Capital, Michael Dell’s $US16 billion private investment firm, is moving away from active stock investing and further into private markets, The Wall Street Journal reported Friday.
- The move comes as stock pickers face difficulty amid a historic bull market. Passive funds have offered similar, if not better, performance at a lower cost.
- The Dell founder will still be exposed to stock moves through his firm’s passive investment strategies and a stake in his namesake computer company.
- MSD co-founder Glenn Fuhrman announced he would retire from the firm at the end of December, capping a 22-year career to start his own investment office, according to The Journal.
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MSD Capital, Michael Dell’s $US16 billion personal investment firm, is shifting its focus from active stock-picking to private markets, The Wall Street Journal reported Friday.
The move represents one of the biggest changes to the firm’s investing strategy in years, though Dell will still be exposed to stock moves through passive investments and his position in Dell stock. The $US16 billion figure doesn’t include the Dell founder’s shares of the computer company, according to The Journal.
The change also comes as a historic bull market cuts into stock pickers’ profits. Surging markets boosted less-expensive passive strategies and left active investors struggling to find the best performers among a sea of winning stocks. Some active fund managers are even turning away from diversification in a bid to outperform the passive and quantitative strategies that threaten their industry.
The record-long market run has also driven more cash to private markets, where investors look to buy into promising startups as early as possible. An ailing initial public offering landscape prevented numerous firms from entering public markets through the last half of the year, and the trend could boost calls for private investment in the short term.
The MSD funds set for closure have been landing healthy returns, according to The Journal, with one up 18% in the year through November. Yet the active stock funds still underperformed the S&P 500 index’s 28% jump in the same period.
“The ability to change is a necessary and important trait of any successful organisation. I have never been more excited or had more confidence in the MSD team, and I look forward to another 20 years of successful performance,” Dell said in a statement obtained by The Journal.
The shift in office strategy also comes with a change in leadership. MSD co-founder Glenn Fuhrman announced he would leave the firm in December to start his own family investment firm, The Journal reported. Dell hired Fuhrman and John Phelan in 1998 to start the family office.
Phelan will continue to run the office from Palm Beach, Florida, according to The Journal.
Dell closed Monday at $US47.34 per share, down about 3% year-to-date.
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