BofA Decides Against External Advisers

Hedge funds under the Bank of America umbrella have been affected by a change in company policy.

The bank will no longer run funds managed by sub-advisers that are not affiliated with the BofA. As a consequence of this shift, external sub-advisers have the option of taking over the functions performed by BofA and becoming full-fledged advisers to the funds.

An investor in one such fund says there was a meeting to vote on a proposal for a new agreement with the sub-adviser so that the latter can assume wider responsibility.

The Dodd-Frank law limits banks’ ownership of hedge and private equity funds. But executives have told investors that business strategy, not new regulation, is behind the policy change.

Sub-advisers’ takeover is not expected to have an impact on the funds’ investment strategies or fees. However, if a sub-adviser is not capable or willing to be fully responsible for a fund, another firm may replace BofA if the clients agree.

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