SunTrust Banks Inc. has completed the merger of its STI Classic Funds with the fund families of Crestar Financial Corp.
The CrestFunds and the Arbor Funds from Crestar, which SunTrust bought at yearend, added almost $6 billion of assets to the STI Classic Funds. The family now has 34 portfolios, with $20 billion under management.
Most of the assets are in personal trust or employee benefit plan accounts.
Seven Crestar funds were folded into SunTrust funds with similar strategies. The other 10 Crestar portfolios were renamed with the STI Classic brand.
Consolidation among the largest banking companies is raising the profile of proprietary fund families. Yet STI Classic Funds are sold only through SunTrust, primarily to personal and institutional trust accounts, as well as retail clients. Atlanta-based SunTrust has 300 brokers.
The fund merger, effective May 24, expanded investment choices, making the banking company's 401(k) plans more attractive, said Ed Ventham, assistant vice president.
"The SunTrust side picks up the CrestFund Life Vision portfolios, which are very popular options in 401(k) plans," Mr. Ventham said. "That was a big plus."
These so-called lifestyle funds-balanced portfolios that change weighting among asset classes over time-are increasingly common because they are helpful to participants looking to simplify how they diversify their retirement investments.
And the simple approach of lifestyle funds can help the investor education efforts of retirement plan sponsors, who find "it's hard to get through to a lot of people," said David B. Master, managing director at Optima Group Inc., a Fairfield, Conn., consulting firm to investment companies.
"Having a set of pre-packaged portfolio options where it's one-stop shopping from the participants' point of view is appropriate for a certain segment of the employee population," he said.
And Crestar, which will not take the SunTrust name until next year, benefits by having STI Classic's two international equity mutual funds-one index and one actively managed.
"It helps them become more competitive in their marketplace," Mr. Ventham said.
Crestar's brokers have been selling the STI Classic Funds since January.
SunTrust has brokerage sales managers in Alabama, Florida, Georgia, and Tennessee. Through Crestar, it also has managers in Virginia, Maryland, and Washington.
