Key Takeaways
- • Chicago Partners Investment Group grew from $350 million to $1 billion in assets under management over seven years by combining Dimensional Fund Advisors (DFA) indexing strategies with alternative investments, tripling its high-net-worth client base in the process.
- • Founder Jim Hagedorn launched Chicago Partners in early 2009 after departing PricewaterhouseCoopers' RIA division and Mosaic Financial Group, timing the startup during the post-financial crisis downturn when assets had contracted to $300 million.
- • The firm's dual strategy—pairing low-fee DFA mutual funds with higher-fee alternative assets—reflects a broader market polarization where growth concentrates at opposite ends of the investment spectrum: passive indexing and hyper-managed hedge funds.
- • Chicago Partners is expanding its alternative investments capabilities by hiring an alternative investments executive from Guggenheim and plans to launch a new fund in fall 2014, signaling a shift from intermediary to direct producer of alternative investment products.
- • The firm is targeting ultra-high-net-worth clients and exploring strategic alliances with family offices to deepen penetration in the institutional wealth management market.
Summary
Chicago Partners Investment Group has achieved $1 billion in assets under management within seven years of its 2009 founding by executing a hybrid investment strategy that combines low-cost indexing with alternative assets—a combination that initially appears contradictory but has proven effective in capturing growth across divergent investor segments.
Founder Jim Hagedorn established the Chicago-based RIA after departing PricewaterhouseCoopers, where he had launched an RIA division in the firm's Chicago office in 2002. Following a brief tenure at Mosaic Financial Group, Hagedorn left in early 2009 to start Chicago Partners amid challenging market conditions, when assets under his management had contracted to $300 million due to the financial crisis. From this starting point, the firm scaled to its current $1 billion milestone while simultaneously tripling its high-net-worth client base.
The firm's strategy employs Dimensional Fund Advisors mutual funds as its core indexing framework, allowing it to charge competitive, low fees while applying DFA's systematic filters to tweak market returns. Simultaneously, Chicago Partners has become a material user of alternative investments across multiple strategies, where fee structures can reach substantially higher levels. This polarized approach mirrors a macro trend documented by industry observers: asset growth concentrates at the extremes of passive indexing on one end and hyper-managed hedge funds on the other, with traditional mid-market active management losing relative market share.
To accelerate growth in its alternative investments business, Chicago Partners is making a strategic hire—an alternative investments executive from Guggenheim—and plans to launch a new fund in fall 2014. The firm is also positioning itself to move upstream, targeting ultra-high-net-worth clients and exploring alliances with family offices. These moves represent a transition from serving primarily as an intermediary recommending third-party alternative products to becoming a direct producer of alternative investment vehicles, potentially widening margins and deepening client relationships.
Founder Jim Hagedorn established the Chicago-based RIA after departing PricewaterhouseCoopers, where he had launched an RIA division in the firm's Chicago office in 2002. Following a brief tenure at Mosaic Financial Group, Hagedorn left in early 2009 to start Chicago Partners amid challenging market conditions, when assets under his management had contracted to $300 million due to the financial crisis. From this starting point, the firm scaled to its current $1 billion milestone while simultaneously tripling its high-net-worth client base.
The firm's strategy employs Dimensional Fund Advisors mutual funds as its core indexing framework, allowing it to charge competitive, low fees while applying DFA's systematic filters to tweak market returns. Simultaneously, Chicago Partners has become a material user of alternative investments across multiple strategies, where fee structures can reach substantially higher levels. This polarized approach mirrors a macro trend documented by industry observers: asset growth concentrates at the extremes of passive indexing on one end and hyper-managed hedge funds on the other, with traditional mid-market active management losing relative market share.
To accelerate growth in its alternative investments business, Chicago Partners is making a strategic hire—an alternative investments executive from Guggenheim—and plans to launch a new fund in fall 2014. The firm is also positioning itself to move upstream, targeting ultra-high-net-worth clients and exploring alliances with family offices. These moves represent a transition from serving primarily as an intermediary recommending third-party alternative products to becoming a direct producer of alternative investment vehicles, potentially widening margins and deepening client relationships.
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