DEF: Liberty All-Star Funds 2026 Proxy Statement

The Liberty All-Star Equity Fund seeks shareholder approval for a new portfolio management agreement with Loomis, Sayles & Company, L.P. and the election of board members.

Summary

• The Equity Fund is seeking shareholder approval for a new Portfolio Management Agreement with Loomis, Sayles & Company, L.P. (Loomis Sayles) to replace the agreement with Sustainable Growth Advisers, LP.
• The Equity Fund will elect two Trustees, and the Growth Fund will elect two Directors, each to a three-year term.
• The Equity Fund will incur approximately $315,000 in additional costs related to the proxy solicitation for the new portfolio manager.
• Loomis Sayles began managing a portion of the Equity Fund's large-cap growth portfolio on June 15, 2026.
• The fee structure for the new agreement with Loomis Sayles is identical to the previous agreement with Sustainable Growth Advisers.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral administrative filing; while the change in sub-adviser is a strategic attempt to improve performance, the associated $315,000 cost and the necessity of a shareholder vote are standard operational requirements.

Positives

• The new portfolio manager, Loomis Sayles, has demonstrated performance that has outperformed the Russell 1000 Growth Index over the last five, ten, and 15-year periods.
• The transition to Loomis Sayles is intended to enhance the mix of investment styles and complement the philosophies of the Equity Fund's other managers.
• The fee rate under the new agreement remains unchanged from the previous agreement, ensuring no increase in advisory costs for the fund.
• The new agreement includes fee breakpoints that allow for lower rates as the fund's assets increase, providing potential economies of scale.

Negatives

• The Equity Fund will incur $315,000 in additional costs for proxy solicitation due to the change in sub-advisers.
• Increased portfolio turnover resulting from the change in managers may lead to higher brokerage commissions and transaction costs, as well as potential capital gains recognition.
• The change in sub-advisers necessitates a shareholder vote, which introduces the risk of non-approval and subsequent operational disruption.

Risks

• Failure to obtain shareholder approval for the new agreement will result in the termination of the Loomis Sayles contract and require the reallocation of assets, causing further costs and turnover.
• The fund faces potential market losses or operational delays if capital addition/withdrawal notices are not sent to the specific designated email addresses provided in the agreement.
• The fund is subject to investment performance risk, credit risk, liquidity risk, valuation risk, and operational risk inherent in its multi-manager methodology.
• There is uncertainty regarding the reliance on the Maryland Business Control Share Acquisition Act following a 2023 court decision.

Future Outlook

The Funds intend to continue their multi-manager methodology, with the Board and AAI monitoring the performance of the five Portfolio Managers for the Equity Fund and two for the Growth Fund to ensure alignment with investment objectives.

Management Comments

• The Boards of Trustees/Directors unanimously recommend that you vote FOR Proposals 1, 2 and 3.
• AAI believes that Loomis Sayles' growth investment style will better complement the philosophies of the Equity Fund's other Portfolio Managers.
• The Board concluded that the nature, extent and quality of the services to be provided by Loomis Sayles were consistent with the terms of the New Agreement.

Industry Context

StockSavvy.ai notes that the transition of sub-advisers in closed-end funds is a common strategic move to optimize performance, though it is often accompanied by regulatory-mandated proxy costs that impact short-term fund expenses.

Comparison to Industry Standards

• The fee structure for the new sub-adviser is consistent with industry standards for similar large-cap growth mandates.
• The use of a multi-manager methodology is a standard approach for closed-end funds to reduce volatility and achieve consistent long-term performance.
• The governance structure, including the use of independent audit committees and financial experts, aligns with NYSE listing standards for closed-end investment companies.

Corporate Governance

Related Party Transactions

• The Funds pay advisory fees to AAI, which in turn pays sub-advisory fees to the Portfolio Managers.
• ALPS Fund Services, Inc., an affiliate of AAI, provides administrative services to the Funds.

Stakeholder Impact

• Shareholders are required to vote on the new management agreement and board elections.
• The Equity Fund will bear the $315,000 cost of the proxy solicitation, which may impact net assets.

Next Steps

• Shareholders to vote on the new Portfolio Management Agreement (Proposal 1).
• Shareholders to vote on the election of Trustees/Directors (Proposals 2 and 3).
• Joint Annual Meeting of Shareholders to be held on August 26, 2026.

Key Dates

Keywords

Liberty All-Star Equity Fund, Proxy Statement, Loomis Sayles, Investment Management Agreement, Closed-end Fund, Sub-adviser, Shareholder Meeting