DWS shareholders in a holding pattern

There’s no need for shareholders of DWS Investments’ mutual funds to rush to the exits. Yet.
Deutsche Bank AG, the parent company of DWS, is shopping the U.S. asset manager, according to a report by the Financial Times. But until an actual sale is announced, DWS mutual fund shareholders are better off sitting tight, said Matthew Lemieux, research analyst at Lipper Inc.
“If you’re a DWS investor and you’re happy with its management and performance, you have to wait and see who’s going to take over and what their goal is,” he said.
The two most likely outcomes are that DWS is sold to a large asset management firm with an established mutual fund lineup, or to a firm seeking to increase its U.S. retail footprint, Mr. Lemieux said. If it’s a firm with an established lineup, it’s probably just interested in owning DWS’ roughly $129 billion in assets under management. Shareholders could take such a deal as a warning sign, he said, as it would likely lead to a series of fund mergers and possible manager changes.
However, if it’s a firm that’s looking to build out its U.S. footprint or round out its existing lineup, manager changes are less likely, Mr. Lemieux said.
Wells Fargo & Co., Ameriprise Financial Inc. and the Royal Bank of Scotland are rumored to be among the bidders, according to the FT report. Mary Eshet, spokeswoman for Wells Fargo, declined to comment. Spokesmen from Ameriprise and RBS were not available for comment.
Deutsche Bank purchased Zurich Scudder Investments, which would eventually become DWS, in 2002 for $2.6 billion. The U.S. retail business was rocked by a market timing scandal just a year later. Since the scandal, DWS has had average quarterly outflows of $682 million, through October, according to Morningstar.
Lem Brewster, a spokesman for DWS, did not return calls seeking comment.

Related Topics: DWS Scudder Distributors Inc.