Wilmington Trust is planning to merge two of its funds. An SEC filing dated July 2 revealed details the proposed reorganization of the Moderate Allocation Fund into the Conservative Asset Allocation Fund. Pending shareholder approval, the moderate fund will transfer all of its assets to the conservative fund on or around August 31.

The board of both funds recommends a reorganization plan and states that the principal strategies and risks of the moderate fund are substantially similar to those of the conservative fund, and a prospectus for the new conservative fund also notes that the two funds currently operate under comparable strategies, but have different allocations among asset classes.

Wilmington currently offers three allocation funds: the aggressive, moderate and conservative asset allocation funds. All three have a fund-of-funds structure that invests in other mutual funds, mainly Wilmington’s own equity, fixed income and money market funds.

The board of trustees say that the reorganization may result in better prospects for growth of assets of the fund, and do not believe that the investment objectives were inconsistent with each other. The board notes that the conservative fund has outperformed the moderate fund for 1, two, three and five-year periods, and the gross expense ratio for the conservative fund after the proposed reorganization is expected to be lower than the current expense ratio for each fund. In addition, the board states that the two funds have similar holdings and share investment advisors and sub-advisors, which would allow for a relatively smooth transition for the shareholders of the moderate fund. 

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