The filing will lay 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 that specialized in fast-growing U.S. stocks.
AMG was not immediately available for comment.
Friess Associates built the Brandywine brand into a magnet for conservative investors that longed for 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 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.
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 will say in the filing investors are being harmed because their money is no longer being managed the way it was when they first invested, the sources said.
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 will say in the filing, the sources said.
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This post originally appeared on Stock Market News