Countrywide Credit Industries Inc., the largest independent mortgage lender in the country, is looking to beef up its mutual fund business.
Cincinnati-based Countrywide In-vestments Inc. said it plans to increase its proprietary fund assets under management to $5 billion by 2002, from about $1 billion today.
Countrywide is compiling a list of 10 to 20 brokerages-some of which already sell the Countrywide Mutual Funds-that would get increased commissions, sales training, and other special services, said William E. Hortz, executive vice president and director of sales at Countrywide Investments.
He declined to name the brokerages, saying he was in negotiations with prospects.
About 370 dealers, including 50 banks, sell the 16 Countrywide portfolios. Roughly 70% of the assets are in money market funds.
And buying an asset management firm is a possibility. Though nothing has been formalized, there has been "a lot of discussion" about making a deal, Mr. Hortz said.
In recent years, Countrywide Credit Industries has been trying to branch out beyond its traditional mortgage lending business.
After an unsuccessful stab at selling third-party funds in 1994, Countrywide bought a mutual fund family in 1997.
Mr. Hortz was hired in 1998 and Countrywide hired seven wholesalers in September.
Additional hires will be made depending on the needs of brokerage firms that partner with Countrywide, Mr. Hortz said.
In looking for partners, Countrywide is considering a number of factors, including the brokerage's size and its willingness to promote the Countrywide Funds.
"Our goal is to help them grow their business; we'd like to participate in that growth," Mr. Hortz said.
One way Countrywide hopes to boost sales revenues is by increasing sales charges for A and C shares.
The maximum sales charge for A shares will increase to5.75%, from 4%. For C shares, Countrywide plans to add a 1.25% sales charge and provide a 2% up-front payout to brokerages, as well as a 1% annual trail fee after the 13th month.
And Countrywide will pay brokerages on its short list an extra 25 to 50 basis points in August and September.
Countrywide will also provide its partners with services such as sales training, seminar support, a business development newsletter, and conference calls with its chief investment officers.
Still, observers said Countrywide faces a difficult task gaining shelf space in a crowded market.
"A new name is always welcome but you're going to have to demonstrate a discernible difference in value-added services and sometimes that's hard to do," said Norman R. Lubin, the chief executive of FMS Group Inc., a consulting firm in Bluebell, Pa.
Nonetheless, Burton Greenwald, a Philadelphia-based mutual fund consultant, said focusing on a select group of brokerage firms is prudent because it would prevent Countrywide's marketing and sales activity from being spread too thin.
