On the heels of completing the reorganization of its fund group,
Wells Fargo Funds Management LLC is setting its sights on product development and is looking specifically at retirement income products.
The company said today that it has completed consolidating the Evergreen Funds into its
Wells Fargo Advantage Funds.
As a result of the reorganization, it is implementing a three-year expense ratio cap for merged or reorganized Evergreen Funds. During this time, the firm can't raise fees on those funds, according to a company statement.
Wells Fargo also has reduced the expense ratios on a number of funds, resulting in about $30 million in free reductions, according to the statement.
Now that the merger is complete, the Wells unit has $61.6 billion in combined equity and fixed income mutual funds, making it the 19th largest fund manager in the United States, up from the 23rd largest, according to Morningstar Inc.
The firm's total assets, including money market funds and non-mutual fund products, is $224.1 billion, and it has 132 open- and closed-end mutual funds, and variable-
trust funds.
Looking ahead, Wells Fargo is considering launching “funds that address the retirement income needs since this is such a growing market,” Karla M. Rabusch, president of Wells Fargo Advantage Funds, said in an interview. “I think in the past, people thought that the stock market would continue to go up and [that] they didn't have to worry about saving and retirement.”
Specifically, Wells Fargo is considering launching products that could guarantee an investor's retirement income, though nothing is definite yet, Ms. Rabusch said.
Although product development is a priority for Wells Fargo, the firm has no plans to get into the exchange-traded-fund arena, she said.
“Most ETFs are indexed, and that's not our capability,” Ms. Rabusch said, adding that the firm right now doesn't want to launch actively managed ETFs.
Even though Wells Fargo Funds Management has grown dramatically, adding a varied selection of portfolios through the Evergreen merger, its main distribution challenge will be the stigma of being a bank-owned fund group, observers said.
“It's a blanket statement, but bank-owned fund families tend to be conservative and stick to their benchmarks,” said Greg Brown, an analyst at Morningstar.
But Ms. Rabusch doesn't think that there is an issue of stigma.
“Forty-nine percent of our funds are four- and five-star funds, and that's a pretty good indication that we are doing a good job,” she said.
