The company that Chauncey Waddell and Cameron Reed founded 80 years ago is taking the men’s names off its mutual funds.
Nine Waddell & Reed mutual funds are set to merge this fall into identical funds that carry the Ivy Funds brand. Both brands are managed by Waddell & Reed Financial Inc.
Eleven remaining Waddell & Reed funds are expected to merge into their Ivy counterparts early next year.
The merging Waddell & Reed funds account for $26 billion of the $80.4 billion in assets the company manages. The mergers are part of a larger plan as the company addresses an outflow of investors’ money from accounts and fundamental changes in how the investment management world works.
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CEO Philip J. Sanders said the mergers reflect in part the greater name recognition of the Ivy Funds in the market.
Waddell & Reed said moving to the Ivy Fund brand separates the public identity of its investment side from the Waddell & Reed branded adviser operations. It sees the move as necessary in a changing marketplace and an issue other fund companies don’t face because they don’t have their own network of advisers.
Overland Park-based Waddell & Reed announced the mergers and other changes while it reported a 31 percent decline in its net income for the second quarter. Profits equaled $23.2 million, down from $33.7 million in the same quarter last year, partly from a 7 percent decline in the amount of assets the company manages.
Sanders took the company’s helm exactly one year ago, succeeding longtime executive Hank Herrmann.
He said he expects to see a decline in the number of Waddell & Reed brokers through a gradual process of increasing their sales minimums and other changes. Waddell & Reed brokers who fail to meet the higher minimums will be able to form teams or can sell their book of business to another company adviser.
The Waddell & Reed funds previously were called United or W&R funds and took the founders’ names about the time the company acquired the Ivy Fund group in 2002.
Tom Butch, chief marketing officer, said investors in the Waddell & Reed funds that merge will notice no differences in their investments as the corresponding Ivy funds’ holdings are identical. Investors will save some money on fees, which Waddell & Reed said will cut into its revenues.
The company is taking other steps to improve its profits and operations. It plans to freeze a pension plan that serves employees, saving the company an estimated $12 million a year. It plans a $6 million contribution to employees’ 401(k) retirement accounts in conjunction with freezing the pension.
Waddell & Reed has 1,440 employees, including 1,200 at its headquarters. Its stock gained 18 cents Tuesday to close at $20.86.
This article was updated to correct the number of employees at the company and its headquarters and the day for which the stock price was cited.