Barclays Global Investors is lending its index fund expertise to a new, Internet-only banking company.
Barclays Global Fund Advisors, a subsidiary of the San Francisco-based firm, will serve as an investment adviser for a family of mutual funds to be offered by X.com of Palo Alto, Calif., when the site is launched later this year.
There will initially be three index funds in the family: a Standard & Poor's 500 fund, a U.S. aggregate bond fund, and a money market fund. The no-load funds will require a minimum investment of $1,000. An X.com spokeswoman said that the company had not determined management fees or pricing for the funds.
Over the next year, the company plans to add other Barclays-managed funds as well as brokerage services.
This is not Barclays' first foray into Internet-distributed funds. Since early this year the firm has also subadvised a group of funds for E-Trade Group Inc., the Menlo Park, Calif., discount broker.
Given Barclays' location and reputation, the alliance with an Internet startup should come as no surprise, said Lee Kranefuss, managing director of the individual investor group for Barclays Global Investors.
"We know a lot of people in the on-line financial services business," he said, "and we've developed a reputation for flexibility, which is important to this business."
John Story, president of X.com Asset Management, said that Barclays' reputation as an investment manager, coupled with its indexing skills, were particularly appealing.
"Turning to Barclays allows us to access a large, well-known money manager and expertise that isn't normally available to the individual investor," he said.
Mr. Story said that future funds would retain the long-term focus of the initial three.
"We plan to add more funds to provide investors with a balanced choice of quality, long-term investments," he said. "We're not looking for the latest hot fund."
X.com will offer a full range of banking and other financial services over the Internet. Barclays Global Fund Advisors manages over $16 billion in mutual fund assets; Barclays Global Investors has over $680 billion in assets under management.
