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Friday, September 02, 2016

A 27-Year-Old Midwestern Mutual Fund Shop Shutters

News summary by MFWire's editors

A 27-year-old Midwestern mutual fund shop is shutting down later this year.

John Mason
Senior Vice President, Chief Investment Officer
John Mason, president of OneAmerica Funds [profile] (OAF), confirms in a filing with the SEC that the Indianapolis-based firm plans to liquidate its four mutual funds on December 9.

The Indianapolis Business Journal covered the news.

Mason is also senior vice president and chief investment officer of the companies of mutually-owned insurer OneAmerica and of OneAmerica Asset Management (advisor to the funds). Yet OAF has its own separate board.

The proprietary fund family was first launched in 1989 for use by participants inside OneAmerica-powered retirement plans and through OneAmerica variable annuities. The four remaining OAF mutual funds are the Asset Director Portfolio, the Investment Grade Bond Portfolio, the Socially Responsible Portfolio, and the Value Portfolio. As of June 30, 2016, the funds had a combined $527 million in AUM. By comparison, OAF accounts for less than three percent of OAM's AUM. The OneAmerica family of companies has about $72 billion in assets under administration.

The planned shutdown comes as the financial services industry is bracing for the DoL's fiduciary regulation to take effect next year, and Mason paints the move to shutter OAF as part of the long-term shift to open architecture in the investing world. Indeed, OneAmerica's retirement plans and variable annuities now connect with a variety of outside asset managers.

"Clients now have a choice of up to 600 investment options," Mason tells MFWire in an emailed statement. "As a result, there has been a decline in OAF investment option selections by plan advisors and clients over the past few years, and the OAF board of directors deemed it appropriate to consider the closure of these four funds in recognition of this trend."

"The objective with this fund change is to ensure participants are transitioned to substitute funds that are comparable to the funds that have been eliminated," Mason adds. "The fund change is all in the name of customer choice. They are not a critical aspect of our business, and that's why we've gone down this path."

The OAF website features a note from Mason about "The Future of OneAmerica Funds":

The OneAmerica Funds have been in existence for over 25 years. As the funds' markets have grown more and more crowded, it has become increasingly difficult to maintain sufficient scale of assets under management to operate the funds effectively. I am proud of what the funds have accomplished over their existence, and I am proud of the portfolio managers who have worked tirelessly to deliver products that are true to their style and investment objectives. However, it is with sadness that I announce our intent to close the funds, likely by the end of 2016.

Edited by: Neil Anderson, Managing Editor

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