IBJ Funds Seeks to Raise Fee, Add 12b-1
January 3, 2000
IBJ Funds Trust, the proprietary fund family of IBJ Whitehall Bank & Trust Company in New York, is asking investors to approve a management fee increase and the installation of a 12b-1 distribution fee on three of its proprietary mutual funds. The changes pave the way for IBJ to sell its no-load funds in the future through financial intermediaries, such as broker/dealers and financial planners. The funds are currently sold directly to investors at net asset value and through Accutrade, an online and multimedia stock trading company, according to Morningstar of Chicago.
IBJ Whitehall, which changed its name in January 1999 from IBJ Schroder Bank & Trust Company, is a wholly-owned subsidiary of the Industrial Bank of Japan, Ltd., a commercial bank headquartered in Tokyo. IBJ manages $7 billion in the U.S.
The changes were proposed in a proxy statement filed Dec. 7. The funds' management fee would be increased between 15 basis points and 25 basis points and a distribution fee of 0.25 percent would be added. But IBJ Funds does not want to make too many fee changes all at once. It will be phasing in the 12b-1 plan, charging a 0.08 percent to 0.10 percent fee depending on the fund through January 2001. It is not clear from the filing when the full 12b-1 fee would be imposed. An IBJ official had not returned a call seeking comment.
IBJ appears to be seeking entry into the financial intermediary marketplace in which it has not had a presence. The introduction of a 0.25 percent 12b-1 distribution plan on the three funds, pending shareholder approval, would provide the financial incentive to broker/dealers and other financial consultants to sell the funds, according to the proxy. First Data Distributors of Westborough, Mass., as the fund group's distributor, would be responsible for paying the trailer 12b-1 commissions to the selling third-parties.
The changes would affect the $62 million IBJ Blended Total Return Fund, the $125 million IBJ Core Equity Fund and the $37 million IBJ Core Fixed Income Fund. A fourth fund, the IBJ Reserve Money Market Fund, will not be affected.
The fund is seeking a management fee increase because of the rising costs of operating a mutual fund in a highly competitive market, according to the proxy. The proxy also reveals that IBJ has been in the red with its fund group's operation since the four-and-a-half-year-old funds were first introduced in February 1995. During the fund group's fiscal year ending Nov. 30, 1999, the adviser had not only waived 0.10 percent of the fund's management fee, but kept overall fund expenses in check by refunding $35,000 of the fund's ordinary expenses, according to the proxy.
The increased advisory fee would allow the fund group to invest in additional technology and personnel to analyze industry trends and individual companies, said the proxy.
"To continue to grow, the fund must compete for assets by seeking to outperform an ever increasing number of funds," said the proxy. The management fee increase would allow the group to attract and retain highly qualified individuals, it said.