By Svea Herbst-Bayliss
BOSTON (Reuters) -Mutual fund manager Friess Associates is challenging its firing by asset manager Affiliated Managers Group (NYSE:) and is asking investors to reject the proposed transfer of more than $1 billion in funds to its successors, according to a regulatory filing made on Thursday.
Friess Associates, which managed Brandywine Funds on Affiliated Managers Group’s (AMG) platform since 2013, filed preliminary proxy materials with the Securities and Exchange Commission. Reuters reported the firm’s plans before the filing, which protests the firm’s firing and points out that investors had no say in the termination.
The filing lays the groundwork for a fight in the normally staid mutual fund industry, pitting AMG, a publicly traded asset manager valued at $6.5 billion that invests $716 billion in assets, against one of its subadvisers, Friess Associates, a nearly 50-year old investment firm specializing in fast-growing U.S. stocks.
“AMG Funds’ board of trustees acted in the best interests of shareholders in taking action to lower management fees and offer a high-quality, more differentiated lineup of funds,” an AMG spokesman said on Thursday.
Friess Associates built the Brandywine brand into a magnet for conservative investors who wanted capital preservation plus solid returns.
Last month, the relationship between Friess Associates and AMG ended when AMG fired Friess as the subadviser on the AMG Managers Brandywine Fund and the AMG Brandywine Blue Fund. The two funds have each returned an average 11% a year over their lifetime, beating both the and returns.
The combined Brandywine assets of $1.16 billion have been assigned to other managers on the AMG platform. Investors in the funds, now called the AMG Boston Common Global Impact Fund and the AMG Veritas Global Real Return Fund, will be asked to approve or reject the move at a May 18 special meeting.
AMG filed its proxy statement on April 9, explaining Friess was removed as part of a “strategic repositioning of the AMG Funds complex” so that all portfolios are managed by an AMG affiliate subadviser. AMG also removed other unaffiliated subadvisers including DoubleLine Capital, Fairpointe Capital and Loomis Sayles.
Veritas Asset Management has been affiliated since 2014 while Boston Common Asset Management joined in 2021 and the two have been acting as subadvisers (on the Brandywine funds) on an interim basis, AMG said.
AMG said in the regulatory filing made earlier in April that if shareholders fail to approve the move, the funds may be liquidated.
But Friess Associates said that investors are being harmed because their money is no longer being managed the way it was when they first invested.
The Global Impact Fund follows an ESG mandate and the Global Real Return Fund follows a real return strategy including short positions in global index futures.
As a result, many investors will be hit with higher taxed short-term gains, Friess said.
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