The Hartford Touts Success of Its Fund Family

Mention of The Hartford usually brings insurance to mind, but its family of mutual funds has passed its first birthday, and executives say they are delighted with the results.

The Hartford Mutual Funds, which were launched late in July 1996, have assets of $500 million, and Hartford officials say they are growing at a clip of $1 billion to $1.5 billion a year.

"We're thrilled with the early success we've had with our public funds," said Stephen Joyce, the head of distribution through banks and thrifts for the insurance company.

Dave Leveson, director of mutual funds for the insurance company, said the rate of asset growth could even improve.

"We think we have a lot room to grow," he said.

Joy P. Montgomery, president of Money Marketing Initiative, Morristown, N.J., said she was impressed by the amount of assets the funds had accumulated-even though the policyholders that the company is focusing on are something of a captive audience.

"I think that's really respectable in a year," she said. "To some extent a captive audience is an easier sale than an unrelated audience. But for a start-up, it's a wonderful percentage of growth."

The funds were cloned from The Hartford's popular variable annuity family, dubbed the Director, which has $20 billion of assets, after customers asked for the product as pure mutual funds, said Mr. Joyce.

The Hartford has been the top provider of variable annuities through banks since 1990.

"It's testament to the success the Director has enjoyed in the bank marketplace but also the outstanding performance we've enjoyed from Wellington," he said.

Wellington Management Co., Boston, manages the assets for Hartford's variable annuities and its mutual funds.

The annuities and the mutual funds have the same managers and objectives.

Insurance companies regularly have internal funds to underlie 401(k) and annuity products.

But The Hartford is one of the only insurance companies that is aggressively marketing mutual funds, said Michael A. Prairie, a partner in Charter Oak Marketing & Financial Group LLC, Farmington, Conn., an insurance consulting firm.

Mr. Prairie said the business is expensive for insurance companies because they do not have the marketing infrastructure. And they still face the hurdle of getting people to associate their names with mutual funds, said Mr. Prairie.

"I'd be surprised if others do" follow The Hartford's lead, he said. "It's really a critical-mass issue and a cost-of-distribution issue. Going after the mom-and-pop $10,000 and $20,000 mutual fund sale supported by retail salesmen in branches in banks is an extremely costly proposition."

Mr. Joyce would not say whether the business was profitable, but said the company considers it a long-term investment.

There are eight mutual funds: four growth funds, two growth and income funds, and two income funds. Their distribution is divided about evenly between the bank, broker, and independent financial planner channels.

The recent introduction of The Hartford's Simple IRA retirement plan, aimed at small businesses, should further fuel the funds' growth.

Employees of participating businesses can invest in any or all of the funds, and their contributions are matched by the employer.

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