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Fund Spy

A Fund Firm Where Downside Is as Important as Upside

Osterweis knows steep losses can kill a fund and tries to avoid them.

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Osterweis--a firm founded and run by a seasoned investor and backed by another pretty good investor.

John Osterweis was a professional analyst and money manager for more than a decade before opening his eponymous firm in 1983 with the financial backing of running buddy and private-equity investor Warren Hellman, founder of Hellman & Friedman. The firm focused on private accounts for about a decade before launching its first mutual fund,  Osterweis (OSTFX), in 1993. The firm has launched just one fund since,  Osterweis Strategic Income (OSTIX), a fixed-income fund, in 2002, though it recently filed papers with the Securities and Exchange Commission to launch a fund that combines its stock and bond strategies in one package. The firm also has a couple of hedge funds.

Brother-in-Law Funds
Investing, not asset gathering, seems to drive this firm. It originally started its first mutual fund for relatives of its wealthy clients who couldn't meet the minimum investments for separate accounts (sometimes referred to as a brother-in-law fund in money-management parlance). It waited about a decade before hiring someone to market the fund to fee-only financial advisors. The firm also has shunned the No Transaction Fee marketplaces of brokers, such as Charles Schwab (though the fund is available at many of them for a fee), and claims to have turned down acquisition offers from larger firms partly out of fear of compromising strategy and performance by growing too fast.

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.