The dust has yet to settle on this fund family thanks to manager departures and acquisitions.
Wells Fargo Funds Management plans eight fund mergers across several categories for its Advantage funds, as manager departures and acquisitions continue to force the fund family to remake itself. Some of the mergers, which are slated for the third quarter of 2011, hold the promise of lower costs through economies of scale as well as a better strategy through the surviving fund. Generally, however, the mergers seem to be a checkerboard of pros and cons depending on the fund.
Glass Half Full?
For example, Wells Fargo Advantage Core Equity
The proposed merger of McCormick and Sanders' other previous charge, Wells Fargo Advantage Classic Value
A Merger and a Closure
Meanwhile, the proposed merger of Wells Fargo Advantage Small Cap Growth
That said, veteran manager Tom Ognar and his small-cap team has been able to stitch together solid performance at Emerging Growth with much lower volatility than Small-Cap Growth had under James Philpott, who left Wells this past March. But, given Emerging Growth's mere $27.9 million in assets, the merger likely will not drive down the cost of the surviving fund. Philpott's departure also spurred proposed mergers for his other previous charges, Wells Fargo Advantage Mid Cap Growth
Quant Gets Bigger
Several big changes are occurring with Wells' quantitative-driven strategies in tandem with Wells increasing its stake in Golden Capital Management to 65% from 45%. While plans for the majority ownership of GCM were announced in February, Wells said today that as part of the deal, GCM, which already subadvises a couple of Wells funds, will also become subadvisor for Wells Fargo Advantage Disciplined US Core
While these funds already had strategies being run by Wells' own quant group, the strategy for US Core will change in that it will incorporate fundamental analysis as well. With Amit Chandra of Wells' quant group becoming chief investment officer of GCM and Wells having the option to take full ownership of GCM, we see these moves as Wells wanting to expand their quant footprint.
To read Wells' press release on the mergers, click here.