CW Galileo Funds is putting its best foot forward for its domestic stock and bond funds by lowering the minimum investment required on its I shares. Going farward, investors need only commit $2,000 rather than $25,000 to purchase the shares.
, senior vice president in TCW Advisor Group's mutual funds unit, explained that the firm made the move to open up its funds to direct investors. "This gives us a chance to compete against other fund firms for retail investors," he explained. Redell believes the firm now carries a number of competitive funds and wants to ensure that those funds are given a fair shake by retail investors seeking funds through what he terms "infomediaries". That group includes Morningstar
, Standard & Poor's
and Value Line
"We don't want to get kicked out of screens because of our minimum," he explained. "If we are going to get kicked out of screens, we want to be kicked out based on our performance." He noted that the firm's intermediate bond fund is currently a strong performer and should benefit from the change as it competes with Pimco
to win retail assets.
TCW will continue to offer its three-year old N shares that carry a 12b-1 fee. Redell explained that TCW is comfortable offering two share classes with the same minimum since it provides a choice for investors and advisors of whether to buy the funds through a transaction fee network using I shares or a NTF network using N shares.
Not changing will be the $250,000 minimum initial investment for the five Institutional Strategies funds, nor will TCW be dropping th $25,000 minimum for its five international funds. In the latter case, the decision to keep the minimum in place was a response to efforts by arbitrageurs to take advantage of other investors in the funds.
Redell does not believe the new move to take assets directly from retail investors will alianate the advisors who currently recommend the funds to their clients. "We are not advertising the funds to retail investors," he explained. Rather, the firm is providing an option to retail investors who make the effort to learn of the funds through infomediaries.
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