Headquartered in Los Angeles, Kayne Anderson Rudnick Investment Management provides investment and wealth management services to individuals and institutions. It typically requires an investment of at least $1 million for general wealth management services, though requirements vary by program and client type. The firm also manages and advises mutual funds, including some funds under the branding of its owner, Virtus Investment Partners.
The bottom line: Kayne Anderson Rudnick Investment Management is a Los Angeles-based investment firm that serves individuals as well as a range of institutions.
|Assets under management: $39,581,789,253|
|Minimum investment: Varies by program|
|Individual investor to advisor ratio: 51:1|
|Fee structure: A percentage of AUM, fixed fees, performance-based fees|
|Headquarters: 1800 Avenue of the Stars, Second Floor
Los Angeles, CA 90067
All information included in this profile is accurate as of August 3, 2021. For more information, please consult Kayne Anderson Rudnick’s website.
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Kayne Anderson Rudnick opened its doors in 1984 to manage money for its founders, including John Anderson, a self-made billionaire. The firm now offers portfolio management and financial planning services for individual and institutional investors. The firm employs over 90 people, including around 30 who perform investment advisory functions.
The firm is owned by Virtus Investment Partners, Inc., a publicly traded asset management business.
Kayne Anderson Rudnick was founded by entrepreneurs John Anderson and Richard Kayne.
Anderson was an attorney and investor in financial services businesses after whom the business school at the University of California, Los Angeles, was named. He died in 2011 at the age of 93. Kanye was a principal at Cantor Fitzgerald & Company prior to founding the firm. In his role at Cantor Fitzgerald & Company, Kayne managed private accounts, a hedge fund and a portion of firm capital.
In 1989, Allan Rudnick joined the firm as another co-founder. Before joining, he was chief investment officer for The Pilgrim Group, where he oversaw equity and fixed-income mutual funds.
Kayne Anderson Rudnick works with a range of clients, serving individuals who both are and are not considered high net worth. (For reference, the SEC defines a high net worth individual as someone with at least $750,000 under management or a net worth of at least $1.5 million).
For individuals to open an account directly with the firm, they would need to invest at least $1 million, although there are exceptions. The firm notes that the minimum annual fee is $10,000, and if clients fall below this annual minimum, they must pay $2,500 every quarter.
Kayne Anderson Rudnick also serves as advisor or sub-advisor for wrap accounts sponsored by certain financial institutions. In fact, the majority of the firm’s clients are discretionary wrap account clients. The minimum investment for this type of account usually ranges from $50,000 to $250,000.
Kayne Anderson Rudnick provides investment management services, as well as financial planning advice. Advisors usually are given discretion to make decisions about what and when to trade, without getting client approval first.
The firm also works with executive clients who have received significant equity grants as part of their compensation, and it helps nonprofits with investment strategy and research. The team may consult outside business partners in certain situations, such as for customized estate planning, tax planning and insurance services.
Kayne Anderson Rudnick also offers other services to clients indirectly. You may invest in a mutual fund advised by or managed by the firm, including roughly 20 funds affiliated with the firm’s owner, Virtus Investment Partners. Or you may select one of Kayne Anderson Rudnick’s model strategies in your wrap account. Under this type of wrap program, offered by firms such as Charles Schwab, you receive advisory, custodial and brokerage services, including trading costs, bundled under one fee.
To recap, services offered by Kayne Anderson Rudnick include:
For each private wealth client, Kayne Anderson Rudnick creates a customized portfolio that takes into account the client’s long-term goals as well as the team’s future market expectations. The firm notes that it builds “high-conviction” portfolios that include 25 to 50 different securities. Its goal is to mitigate risk by investing in securities that it believes are high-quality and well-positioned, rather than simply through diversification. On average, the firm holds investments for 36 to 60 months.
Kayne Anderson Rudnick offers a number of proprietary equity and fixed income investment strategies, including those that are both passive and active, as well as access to outside managers. When developing its proprietary strategies, the team at Kayne Anderson Rudnick relies primarily on its own research, and looks for a long list of specific characteristics in a company to determine if it has a competitive advantage.
How much you’ll pay to work with Kayne Anderson Rudnick depends on the amount you’re investing with the firm, since it offers a tiered fee schedule. Private wealth clients will pay a percentage of their AUM, ranging from 1.00% for the first $3 million invested, then dropping to 0.60% on amounts beyond $10 million, as outlined in the table below:
|Kayne Anderson Rudnick Wealth Advisory Fee Schedule|
|Assets under advisement||Annual fee|
|First $3 million||1.00%|
|Next $2 million||0.80%|
|Next $5 million||0.70%|
In addition to the rates outlined above, clients with separately managed accounts can expect to pay an additional 0.30% each year. Keep in mind that on top of fees paid to Kayne Anderson Rudnick to manage your portfolio, you still could owe brokerage commissions, transaction fees and other related costs and expenses.
The firm may also levy performance-based fees, based on a share of capital gains or capital appreciation of a client’s assets. However, the firm notes that this arrangement only will apply to certain clients and is negotiated on an individual basis.
Over the past 10 years, Kayne Anderson Rudnick discloses two disciplinary events, both of which stem from the financial supervisory authority in Norway. In July 2018, the firm was fined $18,500 the authority in Norway because it was determined that it had not disclosed its share in a Norwegian company in a timely manner. The firm was fined a second time, in June 2021, for the same issue; in this case, it paid a fine of approximately $23,000.
Since Kayne Anderson Rudnick is an investment advisor registered with the SEC, it’s required to disclose on its Form ADV all material facts regarding legal or disciplinary events that could impact a client’s evaluation of the firm or the integrity of its management team. For more information, visit Kayne Anderson Rudnick’s IAPD page.
To reach out to Kayne Anderson Rudnick, you can fill out this form on its website, which requests the following information:
If you establish a relationship directly with Kayne Anderson Rudnick, as opposed to through a mutual fund the firm manages, you can expect to meet with the firm at least once a year, and sometimes quarterly if requested. Clients can expect to receive reports at least quarterly laying out their holdings and performance, as well as any relevant tax details.
Kayne Anderson Rudnick has offices in the following locations:
Kayne Anderson Rudnick is well-regarded for its equity strategies. It conducts its own original research on companies it’s considering for investment, including talking to company management, customers and competitors, and has identified a standardized list of characteristics it seeks out when hunting for prospects.
As for its client list, the firm aims to help wealthy individuals, families and institutions manage their portfolios and plan for their financial futures. Investors who fall short of the typical $1 million minimum investment required for wealth advisory services may not make the cut to become a client, although there are exceptions made for an extra fee. You may want to look elsewhere, too, if you’re primarily looking for a financial plan and not portfolio management, as the firm provides financial planning to only a small number of its clients.
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