Bank of America Corp. will officially merge the mutual fund groups of the old BankAmerica and NationsBank Corp. this month.
With assets of $67.96 billion, the combination of Nations Funds and the old BankAmerica's Pacific Horizon family would be the fourth-largest run by a banking company, according to Lipper Analytical Services Inc.'s first- quarter rankings. The merged family will use the Nations Funds name.
Citigroup Inc. is tops in assets under management, with $133.1 billion, followed by Pittsburgh-based Mellon Bank Corp., with $112.5 billion, and Charlotte, N.C.-based First Union Corp., with $70.6 billion, according to Lipper.
Like many banking companies, Bank of America is heavily weighted in money market funds, which would total $48.9 billion after the merger.
According to first-quarter data from Financial Research Corp. of Boston, Bank of America ranks 35th among managers of long-term funds.
"There are some real benefits in dollars as well as the opportunity to expand the product offerings," said Robert H. Gordon, president of NationsBanc Advisors Inc., the investment adviser for $614 billion-asset Bank of America.
The fund merger, which is awaiting shareholder approval, is expected to be completed May 21. It would be the second sizable bank-affiliated fund merger in recent months.
Bank One Corp. of Chicago combined its funds with those of the former First Chicago NBD Corp. in March.
The new Nations Funds would have 63 funds-a combination of 57 portfolios from NationsBank and 17 from the old BankAmerica.
Some funds will be consolidated after the merger is complete to eliminate duplication. For example, both families have money market funds that invest in government obligations, short-term Treasuries, short term tax-exempt securities, and a mix of short-term corporate and government securities, Mr. Gordon said.
Funds that will remain intact include BankAmerica's Pacific Blue Chip Fund, which invests in large-capitalization stocks; the Capital Income Fund, which invests in convertible securities; and the California Municipal Bond Fund.
Any personnel change is up to the subadvisers who manage the funds, Mr. Gordon said.
Because of their ability to specialize, subadvisers offer "better and more consistent investment returns than if you're trying to do many different styles of investment management," Mr. Gordon said.
The old Nations Funds used seven subadvisory firms, but after the merger there will be eight. The additional subadviser is Chicago Equity Partners, a unit of the old BankAmerica.
According to Mr. Gordon, the Nations Funds moniker was chosen because it has wider appeal. "'Pacific Horizon' is probably more regionally limited. 'Nations Funds' connotes more of a national reach," he said.
Marketing efforts for the combined group will focus exclusively on financial intermediaries, including brokerages, financial planners, and Bank of America's private banking arm, Mr. Gordon said.
