LOS ANGELES — Broker-dealer Neighborly has hired Christine Todd, a 28-year municipal market veteran, to run a new impact investment management branch of the company.
Todd was president of Standish Mellon, where she oversaw $30 billion in municipal bonds and a fixed-income portfolio totaling $150 billion. Prior to that, she was a vice president at Gannett, Welsh & Kotler, having worked her way up from the municipal bond research and trading team.
“Christine represents a tremendous strategic hire for us,” said Jase Wilson, co-founder and CEO of Neighborly.
Neighborly will join other municipal bond investment firms who have launched trading platforms aimed at creating portfolios with a social-consciousness bent.
The difference, says Todd, is that Neighborly has always approached the industry from the angle of creating municipal bond market access for more retail clients by using technological solutions.
“We aren’t burdened by legacy infrastructure where we have to accommodate inefficiencies, because of pre-existing hurdles,” Todd said.
Neighborly was an early supporter of blockchain, a distributed ledger technology that records digital transactions in a way that is accessible throughout a given network of computers, eliminating the need for a third-party or centralized data storage center.
Neighborly’s aim of “democratizing the muni market,” by using technology to open up investing for a broader swath of retail investors appealed to Todd, she said.
“Most of the investment will come from investors, who know that Neighborly wants to make an impact with its investments,” Todd said. “By moving investments to Neighborly, they can leverage their wealth to leave a story behind of how they changed the world.”
The investment management firm will target institutional investors such as university endowments, community banks, and not-for-profit hospitals as well as high-net investors.
The Neighborly Investments initiative could add some market diversity for socially-minded investors while also expanding issuance, said John Donaldson, vice president and director of fixed income at Radnor, Pa.-based wealth management firm Haverford Trust Co.
"It should have a very positive response from a broad potential client base looking for exactly these type of projects," he said.
“Community banks have to invest in their communities, not-for-profit hospitals have a mandate to achieve a positive impact in their communities and university endowments are highly-incentivized to make investments in the local community,” Todd said. “Community investment appeals not only to taxpayers, who know and love their neighborhood, but to institutions who can help build bridges between themselves and communities.”
Todd is just the latest in Neighborly’s efforts to bring on people with municipal bond expertise.
Matt Posner, a 34-year-old managing director at Neighborly, who joined the firm last year, was named a Rising Star by The Bond Buyer in September.
The broker-dealer currently has 30 employees across its three divisions — Neighborly core, the broker-dealer, and the investment firm, Todd said. The company is in the process of hiring 10 people for its new investment branch, she said. They are looking for traders that have not only skills in fixed income, but also demonstrate skills in engineering and programming.
The firm has a goal of growing the investments it manages to $10 billion to $25 billion within the next three to five years, Todd said.
“We have tremendous support from our partners in Silicon Valley, institutions in the banking sector, university endowments and the not-for-profit healthcare systems,” Todd said. “Ultimately, we would like to see our client base expand to outside the U.S. to Europe and Asia.”
Initially, Todd said, Neighborly plans to provide clients with investment-grade options only adding value by using technology to identify inefficiencies in pricing.
Neighborly is creating a trading platform using propriety algorithms that will search for investments in the highly-fragmented muni market that meet social-consciousness goals, Todd said. The municipal market — with its focus on financing infrastructure such as roads and bridges as well as school buildings and water projects — lends itself well to social consciousness investing, she said.
Todd has spent the past year in Europe speaking with potential investors there. In addition to opening up the market to a broader swatch of retail investors in the U.S., Neighborly also wants to create portfolios that appeal to European investors, who like the stability of the U.S. municipal market and are looking for socially-conscious investment options, she said.
“By applying a creative and forward-thinking approach to the centuries-old market, we’re empowering clients to improve communities — and the planet — while earning a tangible return on investment,” Wilson said.
Christine Albano contributed to this story.