Manage the Indexes

The last time anyone in the extended Collier family in Naples invested in a money management firm, it paid off big.

So it's noteworthy that another branch of the Collier family — this time, the Sproul family — recently announced it acquired a controlling stake in Antonetti Capital Management in Naples. Terms of the deal were not disclosed.

The investment brings to mind the Miles Collier family's Private Capital Management, a hugely successful money management firm in Naples that at one time managed as much as $31 billion and was sold to Legg Mason in 2001 for nearly $1.4 billion. Private Capital's stock-picking prowess lasted through two decades until the recent economic downturn slashed returns.

But any similarities end there.

While the Sprouls are descendants of Barron Gift Collier, the advertising magnate for whom the county is named, Antonetti Capital isn't in the business of picking individual stocks. “We haven't found stock pickers who can consistently outpace the market,” says Patrick George, a managing partner of Antonetti Capital and a principal of Halstatt Management, the company responsible for managing the financial assets of the Sproul family endowment.

Instead, Antonetti Capital spreads client funds among exchange-traded index funds depending on its economic outlook and world events. Exchange-traded funds (better known by their initials, ETFs) are like low-cost index mutual funds, but they trade like stocks on exchanges. Index funds are investments that track a benchmark index, such as the Standard and Poor's 500-stock index.

The firm's founder, president and managing partner, Pat Antonetti, started his own firm in Naples two years ago after leaving Fort Pitt Capital Group. With the recent Halstatt investment, Antonetti now manages nearly $100 million for about 100 clients.

“The industry is going to have to change; fees are too high,” says Antonetti, whose firm charges 0.5% to 1% annually based on assets under management.

Some other firms may charge about the same, he says, but often the investments they use are costly. Many ETFs, by contrast, charge small fractions of a percent in fees.

While it may invest client money in ETFs, Antonetti Capital does so by weighing which sectors of the markets could outperform based on events such as Federal Reserve monetary policy or the cycles of economic growth. “We're not passively investing money for clients,” Antonetti says.

For example, the firm increased its exposure to the financial sector when U.S. banks passed government stress tests recently. Meanwhile, as the economy recovered, the firm reduced its exposure to consumer staples, which typically hold up better in an economic downturn but provide limited growth during a rebound. Currently, relative to index benchmarks, the firm has a greater exposure to energy, technology and materials and less exposure to telecommunication and utilities.

But Antonetti Capital doesn't make big bets on any single sector of the economy, subscribing to the notion that it pays to be well diversified. It makes tactical adjustments to portfolios three to four times a year or when extraordinary events warrant them. Client assets are in custody with Charles Schwab.

For now, Antonetti Capital is targeting high-net-worth clients from Tampa to Naples and will build a track record of results for the next three to five years. Once the firm has established a good track record over that time, it plans to add institutional investors.