At a glance
- The 22 funds and any sub-advisers involved were not named.
- For an advisor whose client owns one of the funds, the 60-day notice becomes the decision window: the client can sell at NAV rather than vote to block a change.
- A shareholder vote binds every holder, while a tender or repurchase at NAV lets each holder decide alone, and the fund pays cash at that NAV to clients who sell.
First Trust asked the SEC on Oct. 22 for permission to change sub-advisers at 22 interval and tender-offer funds without a shareholder vote.
The requested relief would require 60 days' notice to shareholders and a tender or repurchase offer at NAV before a sub-adviser change. The 22 funds and any sub-advisers involved were not named.
For an advisor whose client owns one of the funds, the 60-day notice becomes the decision window: the client can sell at NAV rather than vote to block a change. Advisory due diligence shifts from whether holders can block the change to whether the client stays or takes the exit.
A shareholder vote binds every holder, while a tender or repurchase at NAV lets each holder decide alone, and the fund pays cash at that NAV to clients who sell.
A vote binds all holders; a tender lets each decide alone
How each route lets a fund holder act on a sub-adviser change
Shareholder vote
One vote for all
- Who decides
- All holders together
- Can block the change
- Yes, by majority vote
- Exit at NAV
- No
Tender at NAV
Each holder alone
- Who decides
- Each holder separately
- Can block the change
- No, sell instead
- Exit at NAV
- Yes, fund pays cash at NAV
Show as table
| Shareholder vote | Tender at NAV | |
|---|---|---|
| Figure | One vote for all | Each holder alone |
| Who decides | All holders together | Each holder separately |
| Can block the change | Yes, by majority vote | No, sell instead |
| Exit at NAV | No | Yes, fund pays cash at NAV |
Reported by The Wrap desk from First Trust exemptive application, filed Oct. 22. Published . Corrections
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