Mutual funds named for founders of Waddell & Reed to disappear

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.

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.

This story was originally published August 1, 2017 at 4:59 PM with the headline "Mutual funds named for founders of Waddell & Reed to disappear."