Everyone knows that the combination of Scudder, Stevens & Clark and Zurich Kemper Investments, announced last week, will create a mutual fund giant.
What remains to be seen is whether the new company-with $80 billion of assets under management-will be better as well as bigger.
"We'll see how they execute," said Philip Tasho, chief executive of Riggs Investment Management Corp. in Washington.
Mr. Tasho's company, a unit of Riggs National Bank, does not offer Kemper funds because competitors Fidelity and Putnam simply perform better, he said.
Riggs might change its mind, he said, if the new company, called Scudder Kemper Investments, translates its clout into improved numbers.
Scudder and Kemper, which was acquired two years ago by Zurich, the Swiss insurance giant, have had their share of troubles in recent years. But if the marriage proves a success, all that could become a distant memory, observers say.
"It's the old case of the whole being greater than the sum of its parts," said Burton J. Greenwald, a Philadelphia-based mutual fund consultant.
Scudder Kemper's size will give it the ability to build a stronger marketing machine, said Mr. Greenwald.
And the combination could turn the company into a significant global player: Scudder has the oldest international equity fund in the mutual fund business, and Kemper has access to foreign distribution channels.
There are, of course, pitfalls. One is that Kemper sells through brokers, and Scudder sells directly to investors. The last thing Kemper's brokers want to see is their carefully cultivated clients on a Scudder direct marketing list, said Mike Scafati, senior vice president at A.G. Edwards.
"There has to be some cultural difficulty," he said. "It's difficult to walk both sides of the road."
Edmond D. Villani, Scudder's chief executive officer and president, who will become the CEO of the combined company, said in a conference call last week that each firm's product lines and distribution channels will remain intact.
The company should take as much time as needed to iron out such potential snags, said Mr. Scafati.
"Asset-wise, they are in a league where they can take a long-term point of view and weather the storm," he said.
The merger could breathe new life into operations that have struggled at times.
Chicago-based Kemper stumbled in the early 1990s: As the market fell in love with equity funds, Kemper remained heavily oriented toward bond portfolios. And its stock-based funds were not strong enough to take up the slack.
Meanwhile, Kemper was plagued by internal turmoil as several key managers departed and rumors of a sale swirled for several years before one actually took place, said Mr. Greenwald.
At New York-based Scudder, a patrician, conservative style was to blame for the company's failure to capitalize on the mutual fund boom of the 1980s.
Scudder has scored some coups lately, such as inking a deal with the American Medical Association to be its exclusive designated investment adviser. It's stepped up its advertising as well.
Among those keeping a sharp eye on Scudder Kemper will be bank broker- dealers. Kemper was until recently a part owner in a major third-party distributor, Invest Securities, and still has a major presence in the bank channel.
Though Scudder has little presence in banks, it is establishing a beachhead through Charles Schwab & Co.'s One Source fund supermarket. One Source, which is now available at some banks, offers Scudder funds.
