Alliance Capital Management plans to overhaul its retail mutual fund business, a long-term initiative that may involve shrinking its fund lineup.
Lewis Sanders, the company's chief executive, told analysts in a conference call that Alliance's retail fund arm is "quite depressed" and outlined a number of steps it will take to rebuild the business.
The New York-based fund shop has been raked over the coals for its involvement in the fund scandal, in which Alliance portfolio managers and top-level executives allowed market timers to trade rapidly in and out of their funds.
In accordance with its record $600 million settlement with New York Attorney General Eliot Spitzer, Alliance will lower its management fees by 20% over the next five years. The company said it will also reduce its transfer agency fees significantly from year-ago levels.
Alliance will "rationalize" its mutual fund offerings, which means it will offer "fewer funds," Sanders said, adding that the reshuffling of Alliance's funds may result in job cuts. However, he was not able to say how many funds would be affected.
Another initiative the firm is undertaking is to simplify its marketing message and decrease spending, Sanders said. Alliance also aims to become a leader in transparency by enhancing its disclosure of fees and breakpoint discounts along with what services investors can expect from Alliance
Total assets under management at the end of 2003 were $475 billion, a 23% increase from the previous year. Fourth-quarter profits were dragged down by a $140 million charge related to its settlement with regulators.
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