One of American Century's
] three new liquid alternative mutual funds removed one of its five subadvisors just before Christmas. And don't expect a replacement to pop up just yet.
| Martin J. Whitman
Third Avenue Management
Chairman, Portfolio Manager
On December 24 the Kansas City-based mutual fund shop dropped Third Avenue
] as one of the subadvisors for the $51.1 million AC Alternatives Income Fund
. American Century launched the fund on July 31. American Century also registered the AC Alternatives Equity
and AC Alternatives Multi-Strategy
funds, though they have not yet launched.
A spokesman for Third Avenue declined to comment on the move.
The removal of Third Avenue from this fund comes less than two weeks after Third Avenue CEO Marty Whitman left
the New York-based value manager in the wake of the collapse and barring of the gates of its once-high-flying Third Avenue Focused Credit Fund
American Century spokeswoman Justin Wills clarifies that American Century's fund "invested in a separate account" run by Third Avenue's real estate value team and "did not have any exposure to Third Avenue's Focused Credit Fund."
| Jonathan S. Thomas
American Century Investments
President, Chief Executive Officer
Perella Weinberg Partners (subadvisor for AC Alternatives funds) has been in close contact with Third Avenue and was concerned about the real estate team's ability to maintain focus given the headline risk, business instability stemming from their CEO's dismissal and regulatory scrutiny on the firm.
Perella Weinberg Partners Capital Management
handles manager selection, daily asset allocation, and exposure to dividend equities and MLPs for the fund.
"Due to the modestly negative outlook Perella Weinberg Partners has on REITs in the current market environment, the fund is not replacing Third Avenue with another subadvisor at this time," Wills states.
In addition to Perella Weinberg, the AC Alternatives Income Fund
still has three other subadvisors, and Wills confirms that they are each "staying consistent with their specific disciplines." The other three subadvisors are: Arrowpoint Asset Management
, which specializes in "niche, opportunistic credit opportunities"; Good Hill Partners
, which is specializes in structured credit; and Sankaty Advisors
, which specializes in high yield bonds and loans.
Correction: A prior version of this story gave the wrong current launch status for two of the AC Alternatives funds. The AC Alternatives Income Fund launched on July 31, while the AC Alternatives Equity and AC Alternatives Multi-Strategy funds have been registered but have not yet launched.
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