Three years after being spun off from Wells Fargo & Co., Allspring Global Investments is closing down its alternative equity team, which currently manages its US Large Company Value Strategy, US Low Volatility Strategy, and Global Long/Short Equity Strategy offerings.
Fund managers like Allspring Global Investments for years have been facing competitive pressure from low fee exchange-traded funds and indexed mutual funds. According to fund tracker Morningstar Inc., over the last 20 years, the average fee paid by fund investors has more than halved—from 0.87 percent in 2004 to 0.36 percent in 2023.
While this means more savings for the client, it also means less revenue for the fund manager.
“We’ve made the difficult decision to discontinue our alternative equity strategies, and our alternative equity team will depart the firm this June,” a company spokesperson wrote in an email Friday morning to InvestmentNews. ”Allspring is committed to offering one unified investment platform with a variety of solutions across asset classes and vehicles.”
It’s not clear how much in assets the alternative equity team at Allspring managed.
“There’s just not enough margin in that kind of business anymore,” said one senior fund executive who spoke privately to InvestmentNews about Allspring shuttering its alternative equity offerings. “It’s harder [to] support the teams that manage these strategies, and the fee pressure is extraordinary. You’ll probably see more of this from historically traditional asset managers.”
Wells Fargo Asset Management in late 2021 was sold to two private equity firms – GTCR and Reverence Capital Partners – for $2.1 billion and renamed Allspring Global Investments. Since then, the company has beefed up its separately managed accounts platform and tiptoed into the actively managed exchange-traded fund space.
But the investment management firm hasn’t been able to boost its assets under management, despite the S&P 500 posting gains of more than 20 percent during each of the last two years. In 2021, InvestmentNews reported the firm had $604 billion in assets under management; Allspring Global Investments’ website currently reported the firm at the end of last year managing $605 billion.
The majority, 76 percent, of those are in fixed-income and money market strategies with the rest in equities and multi-asset strategies.
According to the company’s website, Allspring’s alternative equity team includes: Harindra de Silva, co-head of systematic research; Ryan Brown, portfolio manager; Kevin Cole; portfolio manager; and David Krider, portfolio manager.
“The team's active approach to systematic factor-based investing is founded upon decades of quantitative research,” Allspring website states. “Dynamic alpha models are combined with multi-dimensional risk management and unique portfolio construction techniques to enhance client returns.”
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