https://www.sec.gov/Archives/edgar/data/1081400/000108140020000939/factorbasedsupp.htm497 1 factorbasedsupp.htm
SUPPLEMENT TO THE PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION
OF
WELLS FARGO FACTOR-BASED FUNDS
For the Wells Fargo Emerging Markets Bond Fund (WBEMX)
Wells Fargo High Yield Corporate Bond Fund (WYCBX)
Wells Fargo International Government Bond Fund (WIGBX)
Wells Fargo U.S. Core Bond Fund (WUSBX)
(each a “Fund”, together the “Funds”)
At a meeting held on August 10-12, 2020, the Board of Trustees of Wells Fargo Funds Trust unanimously approved the liquidation of the Funds.
The liquidation of the Funds is expected to occur after close of business on or about August 27, 2020. Shareholders of the Funds on the date of liquidation will receive a distribution of their account proceeds in complete redemption of their shares.
August 13, 2020
II080/P1300SP
Comments
This filing is in a sense a followup to a filing last February liquidating the four Wells Fargo Factor Enhanced funds.
https://mutualfundobserver.com/discuss/discussion/55305/wells-fargo-liquidates-several-enhanced-mutual-funds.
All 8 funds (those four and the four here) were supposedly introduced in August, 2017. Supposedly, because the initial prospectus names all eight funds, but only has info on seven. The eighth fund, Int'l Gov Bond Fund, was then (re)introduced in a separate prospectus and launched Nov. 2017.
Seeing a whole batch of fund launched (sort of) simultaneously, then shut down within three years, makes one wonder what the management company was thinking.
The four shut down earlier would seem to be an ill fated attempt at latching onto a fad (or trend if you prefer), factor investing. The four shut down here are different.
Admittedly international bonds (whether sovereign or EM) are not exactly mainstream. But they're not exactly the flavor du jour either. The management team is part of the larger team for WF International Bond Fund ESIYX, which has a fairly poor record and under $100M AUM. It's no surprise that the two funds here failed to take in much above $1M. What was WF thinking in launching a fund more narrowly focused (restricted to government debt) and a niche fund (EM bonds)?
The US Core Bond Fund likewise holds only around $1M AUM. Why did this one fail? Okay, a lackluster record, but it's got mostly the same team as WF's Core Plus Bond Fund STYAX that has done a bit better, and has over $1B in assets. A mainstream category and a competent team. Another me too fund in a crowded field?
The High Yield Corporate differs from the others - it has almost $1B in AUM. It fared a bit worse than its peers in the March swoon, likely because it holds mostly lower grade junk. But its overall record (3 years) is okay, and it's got enough assets to be profitable.
One can say that it makes sense to close down seven of these funds; but then it made little sense to launch them. The reverse may be true of the last fund. Either way, it leads one to wonder what WF is doing launching funds.
FWIW, the remaining "new" WF funds (shorter than five years) are:
Dynamic Target Date Funds - a series distinct from its traditional Dow Jones Target Date Funds
Global Investment Grade Credit Fund WGCIX - $76M AUM, primarily for institutional/qualified plans
Low Volatility US Equity (WLVLX) - $57M AUM, launched 2016
Municipal Sustainability (WMSAX) - $26M AUM, launched this February
Special Int'l Small Cap (WICIX) - $5M AUM, primarily for institutional/qualified plans
Thanks for noticing the incorrect symbols. I corrected them.
LOL that works on so many levels!