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Luuk Jacobs

closing or merging funds to erase history of underperformance

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Colin Ng

Luuk this is an interesting topic....historically, there has been a direct correlation between M&As and fund mergers (with much industry consolidation over the last 5 years, 430 fund mergers / closure suddenly does not seem like a lot).

One can see the allure of merging two similar funds (with the same benchmark) as it instantly increases the size of the fund's AuM and in cases where it is a numbers game, you now have scale to improve your fund's distribution.

At a previous project where we merged two similar funds, i believe ESMA had some guidance to offer for what will go into the merged KIID if it met certain criteria of a merger (it should only show the past performance of the receiving fund).

But not much stopping a merger of an underperforming fund into a well-performing one, instead of the other way round!

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