Kopp Investment Advisors
is getting out of the Forty Act fund business in order to focus on its institutional separate account mandates. That decision comes to the benefit of American Century Investments. The fund firm is purchasing Kopp's two mutual funds with $300-$350 million for an undisclosed amount.
, chairman of the Edina, Minnesota-based asset manager, explained that the sale was driven by changes in the fund industry and his desire to focus Kopp on its institutional clients. The deal represents about 20 percent of the firms roughly $1.5 billion in assets under management.
"In recent years, it has been increasingly difficult for small fund groups to thrive. Heightened regulatory and compliance burdens along with aggressive industry competition require the scale of a larger firm like American Century," Kopp explained. Those trends are driven by rules changes necessitating added compliance staff and outside directors as well as the growing cost of distribution for fund products.
Kopp's two funds -- Kopp Emerging Growth Fund and Kopp Total Quality Management Fund -- were launched in 1997. They will be merged into American Century products. In a merging of funds that is expected to be completed in February 2007, Emerging Growth will be folded into the New Opportunities II Fund and Total Quality Management will become part of American Century Equity Growth Fund.
The Kopp and American Century fund boards have both already approved the merging of the funds.
, American Century senior vice president of business development said that the acquisition will allow the Kansas City-based fund firm to lower costs in its funds.
"The additional assets will allow us to reach a fee breakpoint on one of our key strategies, New Opportunities II, which will directly translate to lower fees for its shareholders," Tucker explained.
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