SAN FRANCISCO--(BUSINESS WIRE)--ReFlow Management Co., LLC, an investment services company, which provides liquidity to mutual fund companies has been awarded Institutional Investor’s Operations Management Award for Excellence in Best Operations Innovations category. The sixth annual awards event recognized top-notch efforts in the industry. ReFlow is recognized for its innovative Redemption In-Kind service (RIK), which offers mutual funds cost and risk reduction as well as potential tax advantages.

“We are honored to receive this Award that recognizes benefits offered by RIK that are unique in the marketplace–providing ETF-like features to shareholders of open-end mutual funds,” said Alan Reid, ReFlow’s President and CEO. “Along with Custom Tailored Equitization (CTE), another new service from ReFlow, RIK has been driving our rapid growth this year.”

Working in tandem with ReFlow’s classic Redemption Service (RS), RIK allows a fund experiencing net redemptions to exchange shares for cash from ReFlow, which takes a position in the fund. Within two weeks, the fund may request redemption of shares ReFlow holds, for which ReFlow expects to request in-kind shares of equal value rather than cash. This exchange process helps the fund lower transaction costs and reduces taxable events, boosting net returns.

The idea of RIK service was prompted by the idea of actively managed ETFs, and attempts to blend the investment flexibility of an actively managed fund with the efficiency of an index-based ETF. “ReFlow took the opposite approach and designed a service which brings the transaction and tax efficiencies of ETFs into the mutual fund world,” said Alan Seigerman, ReFlow’s Chief Operating Officer. By conducting in-kind transactions, similar to ETF transactions, ReFlow helps actively managed mutual funds maximize after-tax returns for their investors.

ABOUT REFLOW MANAGEMENT, LLC

ReFlow provides mutual fund companies with liquidity via a set of comprehensive and precise liquidity management services designed to manage flow-driven events and help improve fund performance. ReFlow’s liquidity solutions give mutual fund managers greater flexibility and control by optimizing cash and trading strategies to reduce costs and minimize taxable events while allowing them to focus on implementing their portfolio strategy. The company was founded by Gordon P. Getty in 2002 and includes Knight Capital Group as a stake-holder. The Securities and Exchange Commission issued a No-Action Letter on July 15, 2002 in response to ReFlow’s unique solutions.

ReFlow Management, LLC, an investment services company, which provides liquidity to mutual fund companies, has appointed Carl Katerndahl, Managing Director of Nuveen Investments Institutional Services Group, a seasoned expert with extensive experience in investing and mutual fund operations, to its Board of Directors.

Mr. Katerndahl, heads broker consultant marketing and the sales effort at Nuveen Investments Institutional Services Group. Prior to that, he spent three years as the head of Private Client Services for NWQ. He also was the Senior Managing Director of Webster Investment Management, one of the founders of ReFlow and Executive Vice President of the Forward Funds for three years. Prior to that, Mr. Katerndahl served as a Vice President for NWQ, responsible for marketing and client service. He has previous experience with Morgan Stanley, Prudential Securities and Salomon Smith Barney. Mr. Katerndahl serves as a committee member of the Investment Management Consultant Association and is on the advisory board of the Money Management Institute. He also serves as a Managing Director of NWQ Investment Management Company, LLC. Mr. Katerndahl graduated from the University of the Pacific.

“The investment industry experience and unique flare for market opportunity that Carl provides will be invaluable in helping ReFlow continue its growth strategy,” said Alan Reid, President of ReFlow. “We are looking forward to maximizing his expertise in fund issues as more and more mutual fund companies employ ReFlow’s liquidity services to reduce their transaction costs,” he added.

ABOUT REFLOW MANAGEMENT, LLC

ReFlow provides mutual fund companies with liquidity via a set of comprehensive and precise liquidity management services designed to manage flow-driven events and help improve fund performance. ReFlow’s liquidity solutions give mutual fund managers greater flexibility and control by optimizing cash and trading strategies to reduce costs and minimize taxable events while allowing them to focus on implementing their portfolio strategy. The company was founded by Gordon P. Getty in 2002 and includes Knight Capital Group as a stake-holder. The Securities and Exchange Commission issued a No-Action Letter on July 15, 2002 in response to ReFlow’s unique solutions.

ReFlow Management, LLC, which provides liquidity solutions to mutual fund companies, has launched a unique new service, Client Tailored Equitization (CTE). Using CTE, funds can “equitize” their cash and receive a return based on their own portfolio (i.e. net asset value or NAV), rather than the typically lower return offered for cash. Today, some funds use futures to equitize a portion of their cash and improve performance; by tying the CTE return to each fund’s own NAV, ReFlow provides a custom fit to the fund manager’s market insights and investments.

In addition to custom equitization, CTE provides for simple and automatic daily adjustments to reflect changes in the cash or the portfolio manager’s view of the market with no additional transaction fee.

"The customized and automatic approach offered by ReFlow’s CTE service is unique," said Alan Seigerman, ReFlow's Chief Operating Officer. "It gives fund managers critical control over market exposure by allowing them to maintain the desired cash levels at all times. They can invest cash immediately, keep the fund invested for maximum generation of alpha, and focus on an investment strategy."

The first to tap the new CTE service is Bridgeway Funds, a family of funds known for its shareholder-friendly policies, which include efforts to minimize trading costs and taxable distributions.

CTE complements ReFlow’s existing Redemption Service (RS); together, they offer a complete automated solution for cash management. It helps to insulate portfolios from changes due to shareholder flow. By using it, funds avoid trading during redemptions or subscriptions and are able to trade at managers’ discretion.

“ReFlow’s custom-fitted process is a total liquidity solution,” said Alan Reid, Chief Executive Officer at ReFlow. “Its tremendous flexibility helps individual funds improve performance by remaining fully invested, or keeping cash on hand, without suffering a performance drag, and by reducing number of trades, transaction costs and taxable events. All of these benefits help funds achieve a competitive edge,” he added.

ReFlow LLC is a San Francisco-based company offering a comprehensive, unique and fully automated suite of just-in-time liquidity solutions for mutual funds. ReFlow insulates funds from the daily fluctuations in cash due to shareholder net subscriptions or net redemptions---providing funds with greater control of their cash and greater market exposure. ReFlow's added control and cost savings provide an edge in today’s competitive marketplace.

ReFlow’s liquidity solutions are available in the United States and Luxembourg, Europe’s largest center of mutual funds. The SEC issued a No-Action Letter on July 15, 2002 in response to ReFlow’s unique solution.

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“We believe this product provides mutual funds and their shareholders with the best possible response to net redemptions,” said J. Alan Reid, President of ReFlow. “Currently, fund managers will sell securities or draw on their cash reserves to meet their liquidity needs. ReFlow allows the fund managers to cover the net redemption without disturbing assets or drawing on cash reserves. As a result, transaction costs and taxable events are reduced and the fund may experience improved performance.” 

ReFlow uses an Internet-based system that purchases and holds fund shares to offset the fund’s redemptions and then redeems those shares back to the fund in a net subscription situation. ReFlow charges a fee at the time of purchase for this service that is determined by a daily Dutch auction. ReFlow recommends that fund bids should be lower than any alternative cost of liquidity. 

“When a mutual fund is forced to sell securities to cover net redemptions, the shareholders’ returns are ultimately penalized,” said Gordon P. Getty, Founder and Chairman of ReFlow. “ReFlow helps the fund manager keep assets of the fund intact. We are very excited to bring this innovation to the market, especially in the current environment.” Mr. Getty has developed ReFlow in collaboration with leaders in the fields of economics and finance. 

“The purchase and sale of fund shares represent an ongoing, significant challenge for mutual funds,” said Roger Edelen, Assistant Professor of Finance at the University of Pennsylvania’s Wharton School. “There are several studies that document a close relationship between fund flows and trading costs. A detrimental impact on performance is clear. ReFlow provides a practical solution to the problem by reducing the need for trading.” 

ReFlow has been developed with feedback from organizations including Dechert, one of the largest investment management law firms in the U.S.; PFPC Inc., the nation’s largest full-service mutual fund transfer agent and second largest provider of mutual fund accounting and administrative services; and Brown Brothers Harriman, a leading mutual fund custodian. The Securities and Exchange Commission issued a No-Action Letter on July 15, 2002, in response to ReFlow’s unique solution.