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Friess Associates-AMG Deal Will Impact Brandywine Funds

TIAA-CREF and Henderson to start a new global real estate investment management company, Invesco High Yield Municipal opens back up to investors, Utah's Gold-rated 529 program cuts costs and adds funds from DFA, and Calamos seeks to begin issuing actively managed ETFs.

Morningstar Fund Analysts, 06/27/2013

Friess Associates, the advisor for the Brandywine funds, announced that its employees are buying back a majority ownership stake in the firm from Affiliated Managers Group AMG. The price tag of the deal was not announced.

Friess is the advisor for the $800 million, Neutral-rated Brandywine BRWIX, the $301 million, Neutral-rated Brandywine Blue BLUEX, and the $127 million, unrated Brandywine Advisors Midcap Growth BWAFX funds. The move ends a relationship between the two firms that spanned more than a decade. While it's not clear what drove the move, Friess has been dealing with poor performance, outflows from the funds, employee turnover, and succession planning.

Under the new arrangement, the assets in the existing Brandywine funds will transfer to three new funds. Friess will become a subadvisor to the funds and the managers also will remain in place. There will be some noticeable changes, though. Fees are expected to slightly decline and the funds will carry AMG's Managers Trust naming convention. Shareholders of the individual funds need to approve the deal, which should happen by September.

AMG paid $241 million in cash in 2001 to buy 51% of Friess Associates. It purchased another 19% interest in Friess Associates in 2004, with the remainder owned by Friess employees. Firm founder Foster Friess was not part of the buyout, but he is a fund shareholder.

TIAA-CREF Joins Forces With Henderson
TIAA-CREF has partnered with European investment manager Henderson Global Investors to launch a new global real estate investment management company. The joint venture, TIAA Henderson Global Real Estate, combines TIAA-CREF's existing European real estate business with Henderson's European and Asia-Pacific real estate ventures. TIAA-CREF will hold a 60% interest in the new business, which will have roughly $20 billion in assets. TIAA-CREF's head of global real estate Tom Garbutt will serve as chairman of the new business. Henderson's managing director of property James Darkins will serve as CEO.

The new venture won't have an immediate impact on retail fund investors, though both firms have discussed exploring other partnerships. Presently, certain Henderson mutual funds are offered through TIAA-CREF's brokerage arm.

Other investment managers are also shoring up their global real estate assets in an attempt to appeal to institutional clients. This joint venture announcement comes just one month after BlackRock BLK announced it will buy real estate investment firm MGPA, doubling the amount of money it has invested in global real estate to $25 billion, according to news reports.

Invesco's High-Yield Muni Fund Reopens
The Neutral-rated Invesco High Yield Municipal ACTHX will reopen to investors on Friday, June 28, 2013. The fund has only been closed to new investors since Sept. 4, 2012, when the fund's managers decided they wanted to take a conservative tact to manage asset growth. The fund was roughly $7.0 billion in assets when it closed, and as of May 2013 assets have dropped to $6.8 billion. Invesco has a history of closing and reopening this fund to control asset growth, a positive signal for investors.

Utah 529 Plan Picks Up DFA Funds, Lowers Costs
The Utah Educational Savings Plan, one of the few 529 plans that earns a top-tier Gold rating from Morningstar analysts, recently announced it is expanding its fund lineup. The plan will add six mutual funds managed by Dimensional Fund Advisors, or DFA, and six Vanguard index funds to its customized age-based and customized static investment options. In addition, the plan will add two static investment options, a mix of 70% equity and 30% fixed income and a more conservative mix of 20% equity and 80% fixed income.

Furthermore, the plan will slash its administrative fee on all four age-based and five of the six static investment options by a range of 14 to 18 basis points. The plan was among the first to offer customizable age-based and static options, a boon for investors looking to have more control over their accounts' asset allocation. At $5.8 billion in assets as of April 2013, the plan is among the top-10 largest offered.

Calamos Files for Permission to Create Actively Managed ETFs
On June 21, Calamos Investments submitted paperwork with the SEC seeking permission to create actively managed exchange-traded funds.

Calamos joins a lengthy list of traditional fund managers that have at least begun seeking exemptive relief from the SEC to be able to enter the active ETF space. According to the filing, Calamos' first actively managed ETF would be named Calamos Focus Growth ETF and would hold "well-known, well-established, and financially viable" companies with market caps greater than $2 billion. The proposed active ETF likely would be a version of a small, open-end mutual fund that has been available for nearly a decade, Calamos Focus Growth CBCAX.

Future active ETFs issued by Calamos could hold equities or bonds, and also could hold mortgage- or asset-backed securities, according to the filing.

Fund analysts Robert Goldsborough, Flynn Murphy, and Kathryn Spica, and Morningstar Advisor magazine associate editor Rob Wherry contributed to this report.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.

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