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First American Funds Joins Nuveen

Plus, a departure from AllianceBernstein, a new PIMCO distribution arm, and more.

Morningstar Analysts, 08/01/2010

Nuveen Investments announced Thursday morning that U.S. Bancorp's USB asset-management business, FAF Advisors (U.S. Bancorp will retain FAF's money market funds), will join its Nuveen Asset Management unit. In exchange, U.S. Bancorp will receive a 9.5% stake in Nuveen Investments and $80 million in cash. The Minneapolis-based FAF has $25 billion in assets under management and serves as advisor to 41 First American Funds.

FAF, which will remain in Minneapolis, will be combined with Chicago-based Nuveen Asset Management, which runs $75 billion in municipal fixed-income assets. The resulting entity will retain the Nuveen Asset Management name; in the future, the First American Funds might be branded under the Nuveen FAF name. Tom Schreier, FAF's CEO, will become vice chairman of wealth management for Nuveen Investments. Bill Huffman, the cohead and COO of Nuveen Asset Management, will become president of the unit.

Alan Brown, executive vice president at Nuveen, said the combination will accelerate the growth of its mutual fund lineup overnight, boosting assets from $23.5 billion to more than $40 billion after the deal closes before the end of the year. There could be some lineup overlap. Nuveen Asset Management is a muni shop and First American's funds include some national and single-state muni-bond funds, along with taxable-bond funds and U.S.- and international-equities funds. Other boutiques under the Nuveen umbrella, such as Tradewinds Global Investors, Winslow Capital, and Symphony Asset Management, also run equity mutual funds.PAGEBREAK

Head of AllianceBernstein Growth Equity Exits
Lisa Shalett, AllianceBernstein's head of growth equities, has left the firm. Sharon Fay, head of value equities, has been named CIO of equities, and members of the growth team will begin reporting to her, as well.

Shalett left AllianceBernstein to become CIO for the global wealth-management division of Merrill Lynch (now part of Bank of America BAC). Her start date hasn't yet been announced.

Also, Vadim Zlotnikov has been named chief market strategist and will lead a new macroeconomic-research group. He'll retain oversight of quantitative analytics for AllianceBernstein's growth portfolios.

PIMCO to Distribute Itself
Allianz SE AZSEY will no longer handle distribution for its PIMCO subsidiary's funds. PIMCO is setting up its own distribution arm that should be ready in early 2011. This shift marks another step in PIMCO's evolution. The firm best known for fixed income began building an in-house equities team last year.

Putnam Cuts Redemption Fees
As of Aug. 2, 40 Putnam funds will no longer charge a 1% redemption fee. The fees were designed to discourage the rapid short-term trading that can harm long-term shareholders. They gained prominence in the wake of the market-timing scandal in the early 2000s, which also ensnared Putnam. Recently, however, a number of firms have begun eliminating these fees if their prospectuses already ban excessive trading.

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