Eaton Vance taking over responsible-investment manager Calvert

October 21, 2016 3:14 PM EDT

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By Ross Kerber

BOSTON (Reuters) - Eaton Vance Corp on Friday said it will take over Calvert Investment Management, once a trailblazer in socially responsible investing that lately has struggled with customer withdrawals and mispriced bonds.

Eaton Vance executives said they plan to cut some of Calvert's 95 jobs and replace stock fund managers, but said they will leave intact the advocacy mission of the $12.3 billion investment firm.

"We understand these are mission-driven funds," said Eaton Vance Chief Executive Officer Thomas Faust in a telephone interview. He said the deal will add a valuable product set to the roughly $343 billion that Eaton Vance and its affiliates manage.

"It's an entry into one of the most attractive areas of investing today," he said.

Currently based in Bethesda, Maryland, Calvert will move some functions to Boston where Eaton Vance is located but will maintain an office in the Washington area "for the foreseeable future," said Eaton Vance spokeswoman Robyn Tice.

The deal is the latest consolidation in asset management, a merger trend likely to accelerate as smaller companies and actively managed funds face pressure from cheaper index products.

Calvert has struggled with redemptions by investors lately, including net withdrawals of $1 billion in 2015, according to Lipper, a unit of Thomson Reuters.

Eaton Vance's Faust said Calvert deserves credit for narrowing the outflow this year and cutting fees, and said the deal will provide Calvert with more sales opportunities. He said some Calvert fund managers would be replaced, mainly on equity funds, but did not specify which managers.

Calvert's fund trustees have recommended investors approve contracts for the funds to be advised by a new unit of Eaton Vance, to be known as Calvert Research and Management and led by Calvert's current CEO John Streur, who joined in 2015.

In addition, Stu Dalheim, who leads Calvert’s shareholder advocacy efforts, is "expected to be central to CRM's go-forward commitment in this key area," a Calvert spokesman said.

Other terms were not disclosed. A spokeswoman for Calvert parent Ameritas Holding Co did not return messages.

On Tuesday, Calvert said it overstated the value of some mutual funds for several years and agreed to settle a civil case with regulators.

Shares of Eaton Vance rose 1 percent in Friday trading to close at $37.66.

(Reporting by Ross Kerber in Boston; Editing by Bernard Orr and Lisa Shumaker)



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