Gabelli Funds is looking to eliminate omnibus accounting from its ABC Fund, a merger/arbitrage fund started in 1993, and require investors to own shares directly through its transfer agent. The problem is that broker/dealers are often charging a service fee for assets held in the fund through omnibus accounts, which do not disclose the beneficial owner of the account.
"For reasons specific to this fund, the advisor believes neither the fund nor the advisor should be responsible for the costs associated with maintaining these accounts held at these intermediaries. The fund eliminated its 25 basis points 12b-1 distribution fee in January 2003," the company said.
The fund was closed from October 2002 until March 1 of this year, in anticipation of increasing merger and acquisition activity. Gabelli continues to waive 50 basis points of its management fee, which is has done since it closed the fund in 2002.
Now, Gabelli has opened the fund only to purchases held directly with the transfer agent, and the company is not accepting new investments through intermediaries. If shareholders approve the proposed measure, existing intermediary accounts will either be converted to directly held accounts or be liquidated.