AIM Management Group plans to unveil a sweep account product and commingled trust funds in April.
The sweep product will be targeted to banks with $200 million to $5 billion of assets, said Mike Rome, senior vice president of institutional product marketing at AIM.
The six commingled fund products are to be sold through insurance companies and nonbank brokerages, he said.
AIM, based in Houston, has a big money market fund business and manages about $25 billion of assets in six funds at any given time.
Its bank relationships for money market funds are with larger banks, and cultivating business from smaller institutions will be a challenge, because AIM will form the partnerships from scratch, Mr. Rome said.
The sweep account will be aimed at businesses and high-net-worth bank customers. AIM will try to make the new product attractive through low costs and good performance, Mr. Rome said.
He declined to discuss pricing further and said eligibility minimums have not been decided.
"Our strategy is to give them a competitive product," he said.
AIM would be the latest mutual fund company to enter the business of sweep accounts, in which idle balances from checking accounts are moved into money market accounts each day to accrue extra interest.
J.P. Morgan & Co. and American Century Investments rolled out a sweep account in the fall. Those companies are marketing the program to banks with $6 billion or less of deposits.
Federated Investors Inc. and SEI Investments Co. are also big players in the business.
AIM may have its work cut out for it, said Kenneth Kehrer, a consultant in Princeton, N.J.
Keeping costs competitive, while spending on advertising to gain market share will be difficult, Mr. Kehrer said.
But the opportunity appears to be there: In a survey conducted last year by Mr. Kehrer of 42 banks of varying sizes, more than half said they did not yet offer sweep accounts.
Larger banks tend to use their own money market funds for sweep accounts. Those big banks, as well as brokerage firms, have used such products to pile up deposits.
"This provides many smaller banks with the opportunity to offer a sweep product to more directly compete for deposits with larger bank competitors and the brokers," said Les Dinkin, managing principal at NBW Consulting Group of Westport, Conn.
Commingled funds, which are a traditional offering from bank trust departments, are similar to mutual funds except that they are not registered with the Securities and Exchange Commission and their results are not publicized on a day-to-day basis.
In recent years banks have been converting commingled funds to mutual funds.
There is still a market for commingled funds, because insurers and brokerages have been entering the trust business or expanding their trust arms, Mr. Kehrer said.
AIM faces a challenge in marketing its funds because many insurers and brokerage firms manage their own money and would not need to go through a third party, he said.
