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Tuesday, August 09, 2016|
After 29 Years and $222MM, a Midwestern Mutual Fund Shop Exits
After 29 years in the mutual fund business, a Midwestern RIA is shutting down its mutual fund suite.
Advance Capital's mutual funds include: the $97.7-million, three-star Advance Capital I Retirement Income Fund; the $75.4-million, three-star Advance Capital I Balanced Fund; the $41.5-million, three-star Advance Capital I Equity Growth Fund; and the $7.2-million, two-star Advance Capital I Core Equity Fund.
Advance Capital launched in 1986, and the balanced and equity growth funds debuted in 1987. The wealth management RIA now has $2.4 billion in assets and more than 5,000 brokerage and investment advisory clients. Advance Capital offers model portfolios and separately managed accounts, in addition to mutual funds.
Chris Kostiz, president of the Advance Capital I Mutual Funds, confirms that Advance Capital's mutual funds have primarily been distributed through Advance Capital's own wealth management business.
"We know all the end clients," Kostiz says, contrasting their model with that of firms who distribute their mutual funds through other intermediaries.
Yet Advance Capital's business has shifted, Kostiz says.
"Our business has changed to more of a discretionary platform," Kostiz says, adding that that model accounts for "eighty to ninety percent of new business coming in."
Yet regulation also plays into Advance Capital's move to exit the proprietary mutual fund business.
"The regulatory environment with the fiduciary rules kind of throws a wrench into it, so we decided to dissolve the funds," Kostiz says. "It's a different environment than it has been in the past."
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