Monday, June 20, 2011
Highland Combines Two Bank-Loan Funds
Reported by Neil Anderson, Managing Editor
Highland Funds [see profile]
just created a new mutual fund out of the ashes of two old bank loan funds. On June 13 the Dallas-based asset manager confirmed the merger of the one-star, $441.15-million Highland Floating Rate Advantage Fund (XSFRX)
with the one-star, $352.44-million Highland Floating Rate Fund (XLFAX)
to create the brand new Highland Floating Rate Opportunities Fund (HFRAX) [see Morningstar]
, who has PMed both funds since December 2008, will PM the new fund.
According to Highland, the combined offering has "better liquidity features and expanded parameters to meet its investment objective" and should have a lower expense ratio.
Company Press Release
DALLAS, June 13, 2011 -- Highland Funds today announced that it has merged the Highland Floating Rate Advantage Fund (XSFRX) and the Highland Floating Rate Fund (XLFAX) into the Highland Floating Rate Opportunities Fund (HFRAX). The new fund offers investors better liquidity features and expanded parameters to meet its investment objective.
The merger was in direct response to investor demand for an open-ended, daily liquid mutual fund focused on the floating rate, or bank loan, asset class. In addition to improved overall liquidity, the new Highland Floating Rate Opportunities Fund is expected to offer a lower expense ratio than its predecessor fund, the Highland Floating Rate Advantage Fund. Furthermore, to best achieve its investment objective of providing a high level of current income consistent with the preservation of capital, the new fund has the flexibility to invest up to 20% of its assets in non-floating rate securities and the ability to hedge against systemic risk.
The Highland Floating Rate Opportunities Fund will have approximately $930 million in total assets. The new fund has A, B, C, and Z share classes, with tickers HFRAX, HFRBX, HFRCX, and HFRZX, respectively. Its portfolio manager is Greg Stuecheli, who had been the named portfolio manager since December 2008 for the merged funds, Highland Floating Rate Advantage and Highland Floating Rate.
"We are pleased to meet investor demand with our new enhanced floating rate offering and will continue to demonstrate our leadership as a premier bank loan fund manager," said Joe Dougherty, President of Highland Funds.
The Highland Floating Rate Advantage Fund and Highland Floating Rate Fund were ranked number one and number two respectively, in the Morningstar Bank Loan category, for return performance YTD through June 9, 2011, according to Morningstar. Floating Rate Advantage was launched in January 2000 and Floating Rate in November 1999.
About Highland Funds and Highland Capital Management, L.P.
Based in Dallas, Texas, Highland Funds is known as one of the premier providers of unique fund strategies distributed through financial intermediaries. The Highland Funds complex consists of a number of distinct registered investment companies falling into two types: open-end "mutual" funds and traditional closed-end funds, with a total of over $3.3 billion in retail assets under management.
Highland Funds is an affiliate of Highland Capital Management, L.P., a global alternative investment manager with approximately $23 billion of assets under management. Combined, the two managed over $17 billion in bank loan assets.
Investors should consider the investment objectives, risks, charges and expenses of the Highland Funds carefully before investing. Please call 1-877-665-1287 or visit www.highlandfunds.com for more information on the Funds. Please read the prospectus carefully before you invest.
Securities may be offered through NexBank Securities, Inc., an affiliate of Highland Capital Management, L.P. NexBank Securities, Inc. is a FINRA member firm.
This press release contains statements, which may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include the anticipated time of closing and anticipated earn-out amounts. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results. Past performance is no guarantee of future results. The Highland Floating Rate Opportunities Fund is the successor to Highland Floating Rate Advantage Fund. This Predecessor Fund is in the Morningstar Bank Loan category. As of June 8, 2011, this fund was ranked by 1 year performance in the top 17th percentile out of 139 funds in the category, for 5 year performance, it was 96th percentile out of 84 funds in the category, and for 10 year performance, it was 88th percentile out of 45 funds in the category. The Highland Floating Rate Fund is also in the Morningstar Bank Loan category. As of June 8, 2011, this fund was ranked by 1 year performance in the top 74th percentile out of 139 funds in the category, for 5 year performance, it was 90th percentile out of 84 funds in the category, and for 10 year performance, it was 84th percentile out of 45 funds in the category. Morningstar's fund performance rankings consider total returns, but do not include loads.
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