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Rating:A $64B-AUM Firm Preps a $150MM Adoption-Conversion Combo Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, March 16, 2022

A $64B-AUM Firm Preps a $150MM Adoption-Conversion Combo

Reported by Neil Anderson, Managing Editor

A $63.5-billion-AUM fund firm's team is preparing to adopt and transform a $150-million-AUM, nine-year-old mutual fund from a familiar, $17-billion-AUM shop that specializes in domestic equity.

Kristof Marius Gleich
Harbor Capital Advisors, Inc.
President, Chief Investment Officer
On Monday, Kristof Gleich, president and chief investment officer of Chicago-based Harbor Capital Advisors, Inc., and Will Muggia, president and CEO (also CIO) of Boston-based Westfield Capital Management Company, L.P., confirmed that they plan to merge the Westfield Capital Dividend Growth Fund into the soon-to-be-launched Harbor Dividend Growth Leaders ETF (GDIV on the NYSE Arca, Inc.). The launch and merger, pending approval by shareholders of the Westfield fund, are slated for late May.

The plan is for Muggia himself, who PMs the Westfield fund (which launched back in 2013), to stay on as PM of the new, actively managed Harbor ETF, while Harbor will be the ETF's investment advisor and Westfield will be its subadvisor. While the Westfield is a series of the Advisors' Inner Circle Fund II, the new Harbor ETF will be a series of the Harbor ETF Trust.

In place of the Westfield fund's two share classes (institutional shares at 95 basis points and investor shares at 120 bps), the new Harbor ETF will come with an expense ratio of 50 bps. Part of that reduction comes from the mutual-fund-to-ETF conversion (as some baked in mutual fund expenses, like shareholder servicing fees, are stripped out of ETFs), but it also represents a 25 bps drop in management fees (which are 75 bps for both share classes of the existing mutual fund).

The adoption-merger-transformation will also change up the fund's other service providers. Dechert will serve as the new ETF's counsel, succeeding Morgan Lewis & Bockius LLP on the Westfield. Ernst & Young LLP will be the independent accounting firm, succeeding Pricewaterhouse Coopers LLP. Foreside Fund Services, LLC will be the distributor and principal underwriter, succeeding SEI Investments Distribution Co.. Harbor will be the administrator, succeeding SEI Investments Global Fund Services. And State Street Bank and Trust Company will be the custodian and transfer agent, succeeding DST Systems, Inc. as transfer agent and Brown Brothers Harriman & Co. (BBH) as custodian.

"We are thrilled to extend our long-term strategic partnership with Westfield," Gleich states. (Westfield has worked with Harbor for more than 20 years and already subadvises two Harbor mutual funds and an ETF.)

"We are excited for the current investors in the Westfield Capital Dividend Growth Fund to benefit from much lower fees and a more tax efficient vehicle," Muggia states.

News of the Harbor-Westfield adoption-conversion-launch-merger comes after the Harbor team launched the Harbor Long-Term Growers ETF (WINN, subadvised by Jennison Associates) and the Harbor All-Weather Inflation Focus ETF (HGER, tracking the Quantix Inflation Index and subadvised by Quantix Commodities LP) last month and the Harbor Corporate Culture Leaders ETF (HAPY, tracking the Human Capital Factor Unconstrained Index provided by Irrational Capital LLC) earlier this month. Harbor first entered the ETF business back in September, and its recent launches have doubled Harbor's ETF lineup to six funds. 

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