Tuesday, February 17, 2009
A Chicago Firm Moves Out of the Retail Fund Track
Reported by Armie Margaret Lee
Ziegler Capital Management
, the investment adviser to the North Track Funds
, is exiting the retail mutual fund business. The Chicago firm inked a deal with Union Bank subsidiary HighMark Capital Management
that will move eight North Track funds, with a combined AUM of $591 million as of end-January, to HighMark. The deal with HighMark comes two months after Ziegler got out of the ETF business.
HighMark and Ziegler started talks in November, said Greg Knopf
, senior vice president and managing director of HighMark Funds, in an interview with The MFWire
"Part of our goal at HighMark is to grow organically and through acquisitions," Knopf said. "This is a very attractive transaction for us because it fills product gaps," he added, pointing to North Track's Wisconsin Tax-Exempt, Equity Income, NYSE Arca Tech 100 Index and Geneva Growth funds.
served as HighMark's financial adviser and Bingham McCutchen
acted as legal adviser.
San Francisco-based HighMark currently has 24 mutual funds, five of which are sub-advised. In 2006, HighMark acquired three funds from Bailard (see
Commenting on the deal with HighMark, Ziegler CEO Tom Paprocki
said in a news release
Tuesday that "retail mutual fund operations and distribution is a highly specialized business, and it's not our Firm's core area of expertise."
Paprocki cited HighMark's reputation and experience as well its scale and "commitment to future growth in the retail mutual fund space."
Ziegler is not the first to announce an exit from the retail mutual fund business this year. Last month, Regions Financial said it was leaving the retail fund management space. Under an agreement it signed with Pioneer Investments, 11 RMK Select Funds will be reorganized into Pioneer funds.(see The MFWire,
If approved by shareholders, the reorganization of the North Track funds into HighMark products is
expected to be completed in June.
Under the agreement, four North Track funds will be reorganized into new HighMark funds and four others will be folded into existing HighMark offerings.
Two other funds in the North Track lineup -- the Cash Reserve Fund and the Strategic Allocation Fund -- will be liquidated.
Ziegler is expected to be retained as sub-advisor to the new HighMark Wisconsin Tax-Exempt Fund, HighMark Equity Income Fund and HighMark NYSE Arca Tech 100 Index Fund. Geneva Capital Management, Ltd., which sub-advises the Geneva Growth Fund, is expected to continue to serve as sub-advisor to the HighMark Geneva Growth Fund.
In December, Ziegler exited the ETF business. Ziegler distributed the assets of its sole ETF, NYSE
Arca Tech 100 ETF,
to shareholders on December 26 (see The MFWire,
Company Press Release
SAN FRANCISCO and CHICAGO, Feb. 17 /PRNewswire-FirstCall/ -- The Board of Trustees of the HighMark Funds and the Board of Directors of the North Track Funds have approved reorganization agreements pursuant to which all of the funds in the North Track mutual fund family except for the Cash Reserve Fund and the Strategic Allocation Fund will, if the reorganizations are approved by the shareholders of the funds, transfer their assets and identified liabilities to certain funds in the HighMark Fund family. Shareholders of the affected North Track Funds would receive shares of the applicable HighMark Fund.
It is anticipated that the North Track Wisconsin Tax-Exempt Fund (PWTEX), North Track Equity Income Fund (NJPAX), North Track NYSE Arca Tech 100 Index Fund (PPTIX), and North Track Geneva Growth Fund (PNMAX) will be reorganized into newly-organized HighMark Funds to which HighMark Capital Management, Inc. will be investment adviser and administrator. The remaining four long-term funds currently offered by North Track are expected to be reorganized into existing HighMark Funds. Collectively, the assets in the transferring North Track Funds represented approximately $591 million on January 31, 2009.
Ziegler Capital Management, LLC, the current investment advisor for the North Track Funds, is expected to be retained as sub-advisor to the new HighMark Wisconsin Tax-Exempt Fund, HighMark Equity Income Fund and HighMark NYSE Arca Tech 100 Index Fund. Geneva Capital Management, Ltd., the current sub-advisor to the Geneva Growth Fund, is anticipated to continue to act as sub-advisor to the HighMark Geneva Growth Fund.
"We are pleased with our newly formed relationship with HighMark," notes Ziegler's Chief Executive Officer, Tom Paprocki. "Retail mutual fund operations and distribution is a highly specialized business, and it's not our Firm's core area of expertise. HighMark has an excellent reputation, substantial experience, scale and commitment to future growth in the retail mutual fund space - all good for the North Track shareholders."
Earle Malm, President and CEO of HighMark Capital Management, Inc., says, "We are excited about the potential addition of the North Track funds to the HighMark Funds family allowing us to provide additional investment options for our shareholders while enhancing HighMark Funds' nationwide distribution capabilities. Additionally, we are pleased about the opportunity to add two additional money management firms to our already high-quality list of sub-advisory firms."
To complete the dissolution of the North Track Funds, the Strategic Allocation (STRATA) Fund and Cash Reserve Funds will be liquidated.
The HighMark transaction is subject to several conditions, including the approval of the shareholders of the North Track Funds. If shareholders approve the reorganizations, it is expected that the reorganizations will be completed in June 2009.
San Francisco-based HighMark Capital Management, Inc. (HCM), a registered investment adviser, is a wholly-owned subsidiary of Union Bank, N.A., with over $17 billion in assets under management for individual and institutional investors worldwide. HCM is also the adviser to the HighMark Funds, with 24 individual funds and over $8 billion in assets. HighMark Funds Distributors, Inc., an affiliate of PFPC Distributors, Inc., is the principal underwriter of HighMark Funds. HighMark Funds can be found on the Web at www.highmarkfunds.com.
The Ziegler Companies, Inc. (Pink Sheets: ZGCO) is primarily known as a growth-oriented, boutique investment banking and investment services firm with a primary focus in the healthcare, senior living, church, school and renewable energy sectors. Operations encompass capital markets (capital advisory services, bond underwriting, mortgage banking, institutional sales and trading) and wealth management, including asset management and investment services.
Nationally, Ziegler's Capital Markets is ranked as one of the leading investment banking firms for not-for-profit healthcare and senior living providers, as well as religious institutions and schools.
Ziegler Wealth Management (retail brokerage) encompasses investment and consulting services for individuals, families, business owners and institutions nationwide.
Ziegler's alternative investing activities include raising and deploying capital through private investment funds with investment objectives related to the real estate, services and technology sectors of the healthcare and senior living industries.
Ziegler Capital Management, LLC provides institutional money management products and services as well as separate account management and mutual fund sub-advisory services.
A special meeting of the shareholders of each North Track Fund will be called and held for the purpose of seeking shareholder approval of the each proposed reorganization or liquidation, as the case may be. Shareholders of the STRATA Fund and Cash Reserve Fund will soon receive a Proxy Statement that will describe and seek their approval of the liquidation of each such Fund. Shareholders of the other North Track Funds will soon receive a Proxy Statement/Prospectus that will describe and seek their approval of the proposed reorganizations and explain the similarities and differences between each such North Track Fund and the applicable HighMark Fund. The shareholders of the North Track Funds are urged to read the Proxy Statements and Proxy Statement/Prospectus carefully when they receive it because it contains important information.
North Track Funds will provide Proxy Statements to shareholders of the STRATA Fund and Cash Reserve Fund free of charge. The North Track Funds will provide the Proxy Statement/Prospectus to shareholders of the other North Track Funds free of charge. North Track Fund shareholders may also obtain the Proxy Statements and Proxy Statement/Prospectus, and any other relevant documents, for free at the website of the Securities and Exchange Commission (www.sec.gov). North Track Fund shareholders may also obtain the following documents of HighMark Funds free of charge by writing to HighMark Funds, c/o PNC Global Investment Servicing (U.S.) Inc., 760 Moore Road, King of Prussia, Pennsylvania 19406, or by telephoning toll free 1-800-433-6884: a Prospectus and a Statement of Additional Information each dated December 1, 2008, an Annual Report to Shareholders for the year ended July 31, 2008, and a Semi-Annual Report to Shareholders for the six-month period ended January 31, 2008. Shareholders may also obtain the following documents of the North Track Funds free of charge by writing to the Fund at 200 South Wacker Drive, Suite 2000 Chicago, Illinois 60606 or by calling 800-826-4600: a Statement of Additional Information relating to the Proxy Statement/Prospectus, a Prospectus and a Statement of Additional Information each dated March 1, 2008, and an Annual Report to Shareholders of the Fund for the year ended October 31, 2008.
North Track Funds, Inc., and its directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the proposed liquidation of the STRATA Fund and Cash Reserve Fund. HighMark Funds and North Track Funds, Inc., and their respective trustees, directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the proposed reorganizations. Information regarding HighMark Funds' trustees and executive officers is contained in HighMark Funds' Prospectus and Statement of Additional Information, each dated December 1, 2008, which are filed with the SEC. As of October 31, 2008, HighMark Funds believes that its trustees and executive officers beneficially owned less than 1% of outstanding shares of each of the HighMark Funds. Information regarding North Track Funds, Inc.'s directors and executive officers is contained in the Prospectus and Statement of Additional Information, each dated March 1, 2008, which are filed with the SEC. As of February 1, 2008, the officers and directors of North Track Funds, Inc., as a group owned less than 1% of the outstanding shares of each North Track Fund, and of each class of each such fund. A more complete description will be available in the Proxy Statements and Proxy Statement/Prospectus.
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