Merrill Lynch & Co.'s hiring of a top OppenheimerFunds executive is the latest example of a big brokerage firm taking steps to bolster its proprietary mutual fund business-an area where brokerages have been notoriously weak.
The company announced Monday that it has hired Robert C. Doll, chief investment officer at OppenheimerFunds, as chief investment officer for stocks at its mutual fund unit, Merrill Lynch Asset Management. At Oppenheimer he is being succeeded by O. Leonard Darling, who comes from the company's institutional unit.
Mr. Doll, who will start next week at Merrill, said he faces a big job in helping turn the company's fund family from an also-ran into a top performer.
"It's going to take some time, no question about it," he said.
But he said the top brass convinced him during the interview process that Merrill is serious about bolstering the business.
"They underscored that asset management has to become more important to us, it has to be preeminent in what we do, and we are going to make it as good as anybody's," Mr. Doll said.
Merrill's mutual fund performance, like that of its wire house competitors, has been nothing to write home about. The company, which has $281 billion of assets under management, ranked 82d last year in a performance assessment done by Lipper Inc.
Merrill Lynch manages an additional $234 billion of assets through Mercury Asset Management, the second-largest U.K. fund manager. Merrill bought Mercury in December 1997. Mr. Doll will have a hand in running the U.S. funds only.
Prudential Investments ranked 77th, while Goldman, Sachs & Co. came in at 70th. Citigroup's Salomon Smith Barney unit was 51st, Morgan Stanley, Dean Witter & Co. was 50th, and PaineWebber Group Inc. was 37th.
In recent months, Citicorp and Salomon Smith Barney have hired top executives from outside asset management firms to bolster their own business. PaineWebber and Goldman have done the same. And Morgan Stanley Dean Witter is trying to leverage expertise from its Van Kampen Funds and Miller Anderson & Sherrard units.
For Merrill Lynch, the hiring of Mr. Doll is the latest move in an overhaul of its funds unit. The reorganization is being led by Jeffrey M. Peek, a former investment banker the company hired in late 1997 to head its global asset management group.
Merrill's effort to soup up its funds' performance has to do in part with the company's new emphasis on selling wrap account products. They often follow asset allocation models that have specific performance parameters.
"As we move to the adviser platform, performance will be the only game," said Geoffrey H. Bobroff, a mutual fund consultant in Greenwich, R.I.
Brokerage firms have often treated asset management as an afterthought and have not shelled out the kind of money needed to attract and keep top talent.
But part of the reason their returns have been so underwhelming is that they tend to be conservative. They often emphasize value funds, which are less likely to suffer big losses but also typically do not deliver explosive returns.
"They're much more afraid of losing an account," said A. Michael Lipper, the president of Lipper.
Part of Mr. Doll's job at Merrill will be to expand the company's offerings to include growth-style funds and core funds, which do not fall into either the growth or value categories.
Mr. Doll's arrival at Merrill may help revive sagging sales of the company's proprietary funds through its 14,000 brokers, said Burton J. Greenwald, a mutual fund consultant in Philadelphia.
"He comes from a background that is very, very sensitive to the needs of brokers and intermediaries," Mr. Greenwald said, noting that all of Oppenheimer's sales come through intermediaries. "That's a very important part of the equation."
Rapport between the mutual fund unit and the brokers has suffered since Arthur Zeikel, the longtime head of the fund unit, retired in January.
