FPA Funds to overhaul board if shift to UMB series trust is approved

Addition of seven-fund, $19.6bn complex would expand UMB platform by more than half

The board of six mutual funds and one closed-end funds advised by First Pacific Advisors, LP, (FPA) has asked shareholders for permission to shift board oversight of the fund complex to multiple-series trust provider UMB Fund Services, Inc., (UMBFS) according to an April 10 proxy filing.

The addition of the $19.6bn fund complex would increase the size of UMBFS’s multiple-series trust platform by more than half. It currently administers about $36.7bn in fund assets across 105 open-end, closed-end, interval, and tender-offer funds.

The multiple-series trust model has become popular in recent years as smaller fund advisers seek to cut costs by outsourcing fund compliance and trust administration to providers like UMBFS, Ultimus Fund Solutions, and U.S. Bank Global Fund Services.

The seven FPA funds are currently overseen by independent trustees Sandra Brown, 68; Robert Goldrich, 61; Albert Osborne, 79; and chair Mark Lipson, 74. FPA managing partner J. Richard Atwood is an interested trustee of all seven funds, while FPA managing partner Steven Romick is the interested trustee of two.

If the proposal is approved during a June 1 shareholder meeting, the board will replace Lipson, Osborne and Romick with former UMBFS CEO John Zader as an independent trustee and UMBFS executive vice president Maureen Quill as an interested trustee.

The seven-fund complex would then become a part of the UMB series trust platform, meaning UMBFS will take over administration of the funds, and the board will eventually oversee funds advised by firms other than FPA.

UMBFS has already provided transfer agency services for the FPA Funds since 2012.

An eighth fund, the FPA Global Equity ETF, is currently part of a series trust operated by Ultimus and is not involved in the proposed reorganization.

UMB currently operates two mutual fund series trusts — the $27.1bn Investment Managers Series Trust and the $4.2bn Investment Managers Series Trust II, and a $5.4bn series trust-like platform for closed-end, interval, and tender-offer funds.

If the reorganization goes through, the FPA Funds Trust would become Investment Managers Series Trust III, Quill told Fund Directions via email, adding that UMBFS’s decision to create a separate trust to house the funds was based on the size of the complex.

“It is prudent to ensure that series trust boards remain at an optimum size to ensure proper oversight,” she wrote. “We felt the best solution for the FPA funds was to move them into a new series trust. We will add additional funds to the trust over time.”

The FPA board decided to endorse the proposed reorganization in order to take advantage of expected cost savings and to help offset the expected retirements by Lipson and Osborne in 2023, according to the proxy.

“FPA believes that the Reorganizations combined with the Funds joining the [UMBFS] Platform will allow FPA to dedicate more time and resources to the management of the Funds’ portfolios by focusing more efficiently the time and resources spent on administrative activities,” the funds wrote.

Zader, 62, led UMBFS from 2006 to 2014, and was an interested trustee of both of its mutual fund series trusts. He is still an independent trustee of one of the Investment Managers Series Trust II.

Quill is UMBFS’s executive director of registered funds and former COO. She joined the firm in 1996.

The funds’ CCO following the reorganization would be Martin Dziura, a consultant who oversees compliance for many of UMB’s trusts, according to the proxy.

The board has an audit committee and a nominating and governance committee.

Total compensation for the FPA independent trustees ranged from $237,500 to $261,500 for the fiscal year ended Dec. 31, 2022.

FPA is a Los Angeles-based asset manager focused on value investing. It managed $24bn across all strategies as of March 31, 2023, according to the firm’s website. UMB Fund Services is a Milwaukee-based subsidiary of UMB Financial Corporation, a commercial bank headquartered in Kansas City, Mo.

John Zader

• Independent/interested trustee, Investment Managers Series Trust II, 2013 – Present
• CEO, UMB Fund Services, 2006 – 2014