Union Bank of California is adding to its HighMark fund family with two new sub-advised offerings. HighMark Capital Management, the bank's asset management unit sponsors the funds. Altogether it offers 14 funds with roughly $10 billion in assets.

The two new funds are the the HighMark Growth, which will be subadvised by Waddell & Reed Investment Management and the HighMark Small Cap Value fund, which will be managed by LSV Asset Management of Chicago.

"Having sub-advisors on the HighMark large-cap growth and small-cap value funds will allow HighMark Capital Management to focus on its key strengths, large-cap value, core and fixed income, while continuing to offer our customers a variety of investment options," said Greg Knopf, managing director of HighMark Funds in a statement.

He added that the two winners were chosen from a field of more than 50 asset managers that completed the bank's request-for-proposal process.

LSV is an value shop that has until now focused on the institutional market where it manages some $7 billion in assets. The firm was founded in 1994 by a team of academics that includes professors Josef Lakonishok (University of Illinois), Andrei Shleifer (Harvard University) and Rob Vishny (University of Chicago).

The twist on LSV is that it relies on the professor's models of behavioral finance to build models by which it runs it assets. The theory underpinning the strategy has grown in popularity among PhD's in the asset management industry, but has yet to find much traction with retail investors.

The HighMark funds are used in the bank's full-service defined contribution products where such a high concept fund may catch the attention of plan sponsors.

"The competitive strength of this strategy is that we studiously avoid introducing subjective tinkering with the process," said Josef Lakonishok. "We are patient investors with strict risk controls to control volatility in the portfolio. Think of it as a portfolio of many little bets."  

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