After a three-year run in the mutual funds sector, Utopia Funds in Traverse City, Mich. is throwing in the towel by liquidating all four of its funds as of Dec. 22.
After a three-year run in the mutual funds sector, Utopia Funds in Traverse City, Mich. is throwing in the towel by liquidating all four of its funds as of Dec. 22.
The fund group, which was launched in January 2006, has $92 million in total assets under management, according to Morningstar Inc. of Chicago.
The Utopia fund group is operated as a unit of FIM Group, a Traverse City-based money management firm with $400 million in separately managed account assets.
“It has been a very difficult time,” said Paul Sutherland, FIM’s chief investment officer.
Mr. Sutherland, who founded FIM Group 25 years ago, expanded the business into the mutual fund arena in an effort to tap into the expansive financial advisory market.
Along those lines, the Utopia brand became synonymous with the cherry candies given out at industry conferences, connecting the firm with Traverse City’s renowned cherry industry.
As the Utopia funds are being unwound, Mr. Sutherland said financial advisers are only responsible for about $20 million of the fund group’s assets.
The rest of the fund assets are from FIM’s separate account clients. Those assets will likely be transferred to the separate account business, he said.
The decision to close the fund shop was made official during a board meeting with auditors last month when it became apparent that there would be no way around a new Michigan tax on mutual funds and real estate investment trusts, Mr. Sutherland said.
The law, which was introduced in January, makes Michigan the only state to tax interest and dividends at both the fund and shareholder levels.
“It seems like the goal of Michigan is to see how many businesses they can send out of state,” he said.
Utopia is one of only four mutual fund firms operating in Michigan.
In the context of current market conditions, Mr. Sutherland said the reality of the new Michigan tax was “the final straw, because it makes the funds non-economic to manage.”
The firm’s board of trustees voted on Nov. 20 to liquidate and terminate the funds.
All positions are being sold from all four funds.
Distributions of normal annual income and capital gains are set for Dec. 5.
Liquidation distributions of income and capital gains, if any, are set for Dec. 19.
The $16 million Utopia Growth Fund (UTGRX) is down 54% this year through Tuesday.
This compares to a 35% decline by the Morningstar World Allocation category over the same period.
The $31 million Utopia Core Fund (UTCRX), which is also in the World Allocation category, is down 47.2% this year.
The $26 million Utopia Core Conservative Fund (UTCCX) is down 39.8% this year, which compares to a 22.8% decline for Morningstar’s Conservative Allocation category.
The $19 million Utopia Yield Income Fund (UTYIX), which is also in the Conservative Allocation category, is down 32.5% this year.
