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Oaktree Capital Management Review

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This review was produced by SmartAsset based on publicly available information. The named firm and its financial professionals have not reviewed, approved, or endorsed this review and are not responsible for its accuracy. Review content is produced by SmartAsset independently of any business relationships that might exist between SmartAsset and the named firm and its financial professionals, and firms and financial professionals having business relationships with SmartAsset receive no special treatment or consideration in SmartAsset’s reviews. This page contains links to SmartAsset’s financial advisor matching tool, which may or may not match you with the firm mentioned in this review or its financial professionals.

Oaktree Capital Management, L.P.

If you’ve heard of Oaktree Capital Management, it’s likely because your pension plan is the firm. According to the its website, Oaktree Capital counts 67 of the 100 largest U.S. pension plans as clients. Though it says that individual investors can have access to its products, it has zero individuals as clients, as of its most recent filings with the U.S. Securities and Exchange Commision (SEC).

The firm, which specializes in alternative investments, is headquartered in Los Angeles, California and has more offices throughout the U.S. in Brentwood, California; New York; Houston; and Stamford, Connecticut. Across the globe, it also has offices or affiliate offices in Amsterdam, Dublin, Frankfurt, London, Luxembourg, Paris, Dubai, Beijing, Helsinki, Hong Kong, Shanghai, Seoul, Singapore, Sydney and Tokyo. 

Oaktree Capital Management Background

The firm is particularly known for its expertise in credit. Its roots go back, in fact, to a group of investors who had been going in together into high-yield bonds, convertible securities and distressed debt, among other things. They officially formed the firm in 1995. It now employs more than 800 people around the world, including dozens of portfolio managers.

As of March 2019, affiliates of Brookfield Asset Management Inc., an even larger alternative investment manager, became the majority owners of Oaktree. Eight senior Oaktree Capital executives have small stakes, including three original founders.

Oaktree Capital Management Client Types and Minimum Account Sizes 

Oaktree Capital primarily works with institutional investors and financial professionals. Its website lists individual investors as a client category, but it looks like you have to be ultra-high net worth, as the minimum investment is generally $100 million.

Oaktree Capital also offers separately managed accounts to such entities as investment companies, pooled investment vehicles, pension and profit-sharing plans, charitable organizations, local governments, other investment advisors, insurance companies, foreign wealth funds, corporations, endowments, foundations and Taft-Hartley plans.

The firm also provides what it calls "managed funds" to private limited partnerships and other pooled investment vehicles. 

Services Offered by Oaktree Capital Management

As mentioned earlier, Oaktree Capital is an alternative investment manager with expertise in credit. It invests in four asset classes: 

  • Credit (distressed debt, high-yield bonds, senior and private loans, convertible securities, multi-strategy credit and emerging market debt)
  • Private Equity 
  • Real assets (real estate and infrastructure) 
  • Listed equities (emerging markets and value/other)

Oaktree Capital Management Investing Philosophy

With all of its investments, Oaktree Capital has these six aims:

  1. Prevent losses first and foremost, an objective it pursues above even finding potential profit areas. As the firm states, "It is our overriding belief that, especially in the opportunistic markets in which we work, 'if we avoid the losers, the winners will take care of themselves.'"
  2. Seek performance consistency. Instead of having especially good years make up for the bad ones, the firm believes that "a superior record is best built on a high batting average rather than a mix of brilliant successes and dismal failures."
  3. Tap less efficient markets. Avoiding efficient markets, where there are many investors with the same knowledge, Oaktree Capital focuses on markets where there is less information and its skill and hard work will pay off.
  4. Specialize in a single asset type. Each of the firm’s portfolios practices a single, explicitly delineated, investment speciality. The firm believes that this is the "surest path to the results we, and our clients, seek."
  5. Take a fundamental, bottom-up approach to securities analysis. Oaktree Capital does not attempt to forecast what's in store for the economy, markets or interest rates. Instead, it conducts extensive, proprietary research of specific companies and bases decisions on that research.
  6. Stay fully vested even when others are moving to cash out of concern for the market climate. As the firm states, "Clients hire us to invest in specific market niches, and we must never fail to do our job. Holding investments that decline in price is unpleasant, but missing out on returns because we failed to buy what we were hired to buy is inexcusable." 

Oaktree Capital Management Fees

Fees could be charged as compensation for advisory services, performance-based fees or transaction-based fees. For managed accounts in its open-end strategies, the fees are typically 0.40% to 0.80% of each account’s net asset value per year, paid quarterly or monthly. For managed accounts in other strategies, Oaktree Capital will negotiate the fee with the client, taking into account such factors as objectives and account size. For asset allocation investment accounts, where multiple strategies are used, the firm may charge a flat fee or negotiate the fee.

What to Watch Out For

The SEC fined and censured Oaktree Capital in 2018. The alleged “pay-to-play” violations involved a personal campaign contribution by an Oaktree “covered associate” to a political candidate who would have the ability to influence the selection of investment advisors for a state or local governmental investor. The alleged violation was not the contribution, but the subsequent three instances (in 2014 and 2016) when Oaktree provided advisory services to the governmental investor. The firm paid a civil penalty of $100,000 within 10 days of the SEC action.

As mentioned earlier, Oaktree Capital is an alternative investment manager that works primarily with institutional, governmental and corporate entities. It does not provide financial planning or wealth management services. It also does not work with small investors. So unless you have $100 million to invest, you may want to look for another firm. 

Opening an Account With Oaktree Capital Management

To contact Oaktree Capital, call one of its offices in:

  • Los Angeles at (213) 830-6300
  • New York at (212) 284-1900
  • Houston at (713) 496-9360
  • Stamford, CT, at (203) 363-3200
  • Brentwood, CA, at (310) 442-0542

All information was accurate as of the writing of this article. 

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How Long $1mm Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology We analyzed data on average expenditures for seniors, cost of living and investment returns to determine how many years of retirement a $1 million nest egg would cover in cities across America.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research