Hennessy Advisors, Inc. Acquires the CCM Core Impact Equity Fund

Rhea-AI Summary

Hennessy Advisors, Inc. (HNNA) acquires assets related to the management of the CCM Core Impact Equity Fund, reorganizing it into an existing ETF. The acquisition amounts to approximately $60 million. Neil Hennessy, CEO, expresses gratitude to shareholders for their confidence. The Fund's unique structure poses potential risks and benefits for investors.

Financial Analyst

The acquisition of assets by Hennessy Advisors, Inc. from the CCM Core Impact Equity Fund introduces a significant portfolio expansion, increasing the firm's assets under management by approximately $60 million. This strategic move is poised to enhance Hennessy's market position in the exchange-traded fund (ETF) sector, particularly within the environmental, social and governance (ESG) niche. The reorganization of the acquired fund into the Hennessy Stance ESG ETF could potentially streamline operations and offer economies of scale.

For investors, the integration of the CCM Core Impact Equity Fund into an existing ETF managed by Hennessy Advisors may offer an expanded suite of investment options aligned with ESG principles. However, the unique structure of the Fund, which withholds daily portfolio holdings, could introduce liquidity concerns and pricing inefficiencies. This opacity may result in higher trading costs and deviations from the net asset value (NAV), especially during volatile market conditions. Investors should weigh the potential benefits of ESG-focused investment against these increased risks.

Market Research Analyst

The ESG investment trend has been gaining momentum and Hennessy Advisors' acquisition aligns with the growing demand for sustainable investment products. The decision to reorganize the CCM Core Impact Equity Fund into an ESG ETF caters to a niche yet expanding investor demographic seeking socially responsible investment opportunities. The move could attract new clients interested in ESG investing, thereby potentially increasing the inflow of capital into Hennessy's funds.

However, the unconventional approach of not disclosing daily fund holdings could deter some investors who prioritize transparency. While this strategy may protect the fund's investment strategy from front-running and copycat investing, it could also reduce the attractiveness of the fund to investors who rely on transparency to make informed decisions. The impact on the market perception of Hennessy Advisors will depend on how effectively they can communicate the benefits of this approach and manage the associated risks.

Legal Expert

The unique operational model of the Fund, which involves withholding daily asset disclosures, may raise regulatory and compliance considerations. While the Fund intends to publish a 'Portfolio Reference Basket' to aid trading, the lack of full transparency could be subject to scrutiny by regulatory bodies concerned with investor protection. It is imperative for Hennessy Advisors to ensure that their reporting and disclosure practices are in line with the Securities and Exchange Commission (SEC) requirements for actively managed ETFs.

Additionally, the differential in trading prices and the fund's actual portfolio value may lead to legal challenges if investors feel disadvantaged by the lack of information. Hennessy Advisors must navigate these legal complexities carefully to maintain investor trust and adhere to market regulations.

NOVATO, Calif., Feb. 23, 2024 /PRNewswire/ -- Hennessy Advisors, Inc. (NASDAQ: HNNA) today announced that it has completed the acquisition of assets related to the management of the CCM Core Impact Equity Fund. As a result, the CCM Core Impact Equity Fund will be reorganized into an existing exchange-traded fund ("ETF") managed by Hennessy Advisors, Inc. This acquisition represents approximately $60 million in assets.

"We are grateful to the shareholders of the CCM Core Impact Equity Fund for their vote of confidence in Hennessy Funds," said Neil Hennessy, Chairman and CEO of Hennessy Advisors, Inc. "We are excited to have the opportunity to provide strong investment management and quality customer service to our new shareholders," he added.

"We know the Hennessy Stance ESG ETF is the right home for our equity fund shareholders and look forward to seeing its ongoing growth," said Alyssa Greenspan, CEO and President of CCM.

The Fund is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. The Fund will not. This may create additional risks for your investment. For example:

• • You may have to pay more money to trade the Fund's shares. The Fund will provide less information to traders, who tend to charge more for trades when they have less information.
  • The price you pay to buy Fund shares on an exchange may not match the value of the fund's portfolio. The same is true when you sell shares. These price differences may be greater for the Fund compared to other ETFs because it provides less information to traders.
  • These additional risks may be even greater in bad or uncertain market conditions.
  • The Fund will publish on its website each day a "Portfolio Reference Basket" designed to help trading in shares of the Fund. While the Portfolio Reference Basket includes all the names of the Fund's holdings, it is not the Fund's actual portfolio.

The differences between the Fund and other ETFs may also have advantages. By keeping certain information about the Fund portfolio secret, the Fund may face less risk that other traders can predict or copy its investment strategy. This may improve the Fund's performance. If other traders are able to copy or predict the Fund's investment strategy, however, this may hurt the Fund's performance.

For additional information regarding the unique attributes and risks of the Fund, see the Fund's prospectus and statement of additional information.

About Hennessy Advisors, Inc. 
Hennessy Advisors, Inc. is a publicly traded investment manager offering a broad range of domestic equity, multi-asset, and sector and specialty funds. Hennessy Advisors, Inc. is committed to providing superior service to shareholders and employing a consistent and disciplined approach to investing based on a buy and hold philosophy that rejects the idea of market timing.

Additional Information
Nothing in this press release shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.

Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. This and other important information can be found in the Fund's statutory and summary prospectuses, which can be obtained by calling 877-671-3199 or visiting hennessyetfs.com. Please read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. For these and other reasons, there is no guarantee the Fund will achieve its stated objective. ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF's shares may trade at a premium or discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a fund's ability to sell its shares. Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Investors may purchase or sell individual shares on an exchange on which they are listed. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. ET, and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. ESG investing risk is the risk stemming from the Environmental, Social, and Governance factors that the Fund applies in selecting securities. The Fund intends to invest in companies with measurably high ESG ratings relative to their sector peers, and screen out particular companies that do not meet its ESG criteria. This may affect the Fund's exposure to certain companies or industries and cause the Fund to forego certain investment opportunities. The Fund's returns may be lower than other funds that do not seek to invest in companies based on ESG ratings. The Fund seeks to pursue its investment objective by using proprietary models that incorporate quantitative analysis.

The Hennessy Funds are distributed by Quasar Distributors, LLC. 

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SOURCE Hennessy Advisors, Inc.

What did Hennessy Advisors, Inc. (HNNA) announce?

Hennessy Advisors, Inc. announced the completion of the acquisition of assets related to the management of the CCM Core Impact Equity Fund.

How much were the assets acquired by Hennessy Advisors, Inc. (HNNA) valued at?

The assets acquired were approximately $60 million in value.

Who is the Chairman and CEO of Hennessy Advisors, Inc. (HNNA)?

Neil Hennessy serves as the Chairman and CEO of Hennessy Advisors, Inc.

What unique feature does the Fund acquired by Hennessy Advisors, Inc. (HNNA) have?

The Fund acquired does not disclose its daily assets, potentially leading to additional risks for investors.

What information will the Fund provide daily on its website?

The Fund will publish a 'Portfolio Reference Basket' daily on its website to aid in trading shares, although it does not represent the Fund's actual portfolio.