Pioneer Investment Management of Boston is asking shareholders of the $183 million Pioneer Balanced Fund to approve hiring Prudential Investment Corporation of Newark, N.J. as the sub-adviser to the fund. If approved, the sub-advisory agreement is expected to take effect May 1. Prudential would assume the day-to-day management of the fund and would determine the asset allocation between the fund's equity and fixed-income portions, according to a Feb. 7 proxy filing by Pioneer.
Pioneer wants to give the fund the flexibility to shift the balance between stock and bond holdings as market conditions dictate, said Denise Robbi-Arena, a Pioneer spokesperson.
Pioneer has been the sole adviser to the fund since 1993. The move allowing Prudential to sub-advise the fund is designed to improve the fund's returns, according to the proxy filing. Prudential is one of the few money managers that handle such tactical asset allocation, according to Robbi-Arena. Prudential currently manages $13 billion in balanced portfolios including more than $1 billion in its proprietary Prudential Active Balanced Fund as of Dec. 31, said the filing.
If approved, Prudential will receive a sub-advisory fee of 0.45 percent of the fund's average daily net assets. Pioneer charges a management fee of up to 0.65 percent of the fund.
This marks only the second time Pioneer has used a sub-adviser for any of its domestic funds. Boston Financial Securities of Boston had been the sub-adviser to the Pioneer Real Estate Shares. But the arrangement ended in November 1999.
"I wouldn't characterize this as a trend," said Robbi-Arena, referring to Pioneer's hiring a sub-adviser for its balanced fund. "I think in this instance, we thought it was a good thing to do for investors." Pioneer has no plans to install sub-advisers for its funds across the board, she said.
Developing the sub-advisory relationship with Prudential is one of a number of new initiatives Pioneer has undertaken since its acquisition by UniCredito Italiano S.p.A. of Milan, Italy on Sept. 29.