The asset-management group of the Bank of Hawaii merits an Average Parent rating.
The bank's three-fund, Hawaii-focused municipal-bond lineup with USD 705 million in assets under management has been decades in the making. It began with the 1985 debut of Hawaiian Tax-Free Trust in partnership with Aquila as that fund's distributor and administrator and expanded between 1993 and 2003 as the bank launched 14 funds across stock and taxable-bond asset classes under the Pacific Capital, brand only to merge away or liquidate 12 of them by mid-2010, leaving Tax-Free Securities and Tax-Free Short Intermediate Securities as the last two. Aquila's early 2024 decision to exit the business led the bank to leverage prior relationships with Foreside Fund Services, Chenery Compliance Group, and JW Fund Management to replace Aquila's role on Hawaiian Tax-Free Trust by September 2024.
The bank now has an opportunity to strengthen its value proposition and reverse a decade of persistent outflows. The similarity between Hawaiian Tax-Free Trust and Pacific Capital Tax-Free Securities, which share the same Morningstar Category, commends their combination into one fund with lower overall fees. The bank's five-person investment team has an experienced lead manager in Reid Smith, but its members otherwise lack deep muni-bond experience and more could be done to clarify succession. Fund ownership is also lacking.
Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Bank of Hawaii (Branding Name ID: BN00000K3N), is covered by Morningstar Manager Research.
United States