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Tuesday, June 11, 2024

First Trust Plans a $504MM-AUM Growth Fund Adoption

by: Neil Anderson, Managing Editor

The folks at a Chicagoland fund firm are preparing to adopt an 11-year-old, actively managed, large cap growth stock fund later this year from an Orange County boutique.

On Friday, the teams at First Trust Advisors L.P. [profile] and WCM Investment Management, LLC [profile] filed to transform the existing WCM Focused Global Growth Fund into a new fund, which would be called the First Trust WCM Focused Global Growth Fund. First Trust would take over from WCM as investment advisor to the new fund, while WCM would stay on as the reorganized fund's subadvisor.

"First Trust has a track record of successfully increasing assets for smaller funds with relatively short track records, and could potentially add size and scale to the Fund, therefore resulting in decreased operating expenses over the long term," the WCM team explains in the filing.

The filing reveals that the WCM and First Trust team expect the reorganization deal to close next quarter (i.e. in Q3 2024), pending shareholder approval. To get the approval of the target fund's shareholders, First Trust and WCM have scheduled a special meeting for those shareholders on August 16. The adoption deal was recommended to the fund's board of trustees by WCM, and the board approved the plan.

The fund has about $504.2 million in AUM, according to Morningstar. Its inception date was June 28, 2013, and it comes in two share classes: institutional shares (WCMGX), with an expense ratio of 105 basis points; and investor shares, with an expense ratio of 130bps. Per the filing, the transformed fund will offer the same two share classes, with the same expense ratios.

The WCM fund is a series of Investment Managers Series Trust. Once transformed, the fund will be a series of First Trust Series Fund.

In the meantime, the WCM fund will switch to First Trust Portfolios, L.P. as its distributor on August 15, replacing Natixis Distribution, LLC. (Natixis also bought a minority stake in WCM back in 2018.)

The First Trust and WCM teams also plan to switch most of the transforming fund's other service providers, too, by choosing new providers for the planned post-reorganization fund (aka the "acquiring fund"). Bank of New York Mellon will serve as the transformed fund's administrator, custodian, and transfer agent. BNY Mellon will replace Mutual Fund Administration, LLC and UMB Fund Services, Inc. (as co-administrators), UMB Fund Services (as transfer agent), and UMB Bank, n.a. (as custodian).

Chapman and Cutler LLP will serve as the transformed fund's legal counsel, replacing Morgan, Lewis & Bockius LLP. And Deloitte & Touche LLP will serrve as the transformed fund's independent accounting firm, replacing Tait, Weller & Baker LLP.

The adoption deal as proposed will keep the same PM team on the transforming fund. Tha tteam includes: Sanjay Ayer, portfolio manager at WCM; Paul Black, CEO of WCM; Michael Trigg, president of WCM; and Jon Tringale, PM at WCM. The acquiring fund is intended to be powered by the same investment strategy and objectives as the existing fund. 

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