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Wednesday, March 14, 2018

The Fourth Wirehouse Rationalizes Funds, In Three Stages

News summary by MFWire's editors

Fund rationalization fever has finally spread to the fourth wirehouse.

This week UBS Wealth Management Americas informed its advisors that it will be going through a three-stage rationalization process on its mutual fund platform, as part of the wirehouse's ongoing due diligence process, a source familiar with the situation confirms. That rationalization, the source adds, is expected to affect about 840 funds, representing about five percent (approximately $11 billion) of the wirehouse's mutual fund assets, pushing UBS' wealth management platform fund count down to about 3,400 funds over the next several months.

CityWire first reported on the changes.

Traci Simpson, executive director and head of mutual funds at UBS WMA, did not respond to a call for comment. Jim Langham, managing director and head of investment products, referred inquiries to a company spokesman, and that spokesman declined to comment on the platform changes.

Stage one of the rationalization will target redundant products, areas where UBS WMA offers multiple similar funds, MFWire has learned. That stage is expected to be completed by the end of April.

"Why should an ice cream store offer three versions of vanilla?" one source familiar with the situation asked rhetorically.

Stage two will target what one source calls "under-utilized strategies" that haven't attracted much assets. That stage is expected to be completed by the end of May.

For stage three, the UBS WMA platform team will remove all no-load funds from the wirehouse's brokerage platform, one source explains. No-load funds will still be available through UBS WMA's advisory accounts, which account for about 60 percent of its $1.2 trillion in assets (which includes mutual funds and a host of other types of investments).

UBS' rationalization follows similar moves by: Morgan Stanley (twice), Merrill, Wells Fargo, and a host of other B-Ds and platforms.

The fund rationalization comes a couple years after UBS began a multi-year advisory platform consolidation with Vestmark. 

Edited by: Neil Anderson, Managing Editor


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