12 Fund Companies Land On B of A's Preferred List

In a closely watched development, BankAmerica Corp. has chosen 12 mutual fund companies whose products it will sell most aggressively through its huge distribution network.

Inclusion on the "A list" is a boon to the favored fund companies because of the bank's sheer sales volume. BankAmerica and NationsBank Corp., which merged in September, account for 11% of all mutual fund sales through banks.

"It is the 800-pound gorilla," said Tony Fadool, national sales manager for Federated Investors, Pittsburgh, which made the list.

Others on the A list include Fidelity Investments, Boston, which was on NationsBanc Investments Inc.'s preferred provider list and now will be on BA Investment Services' as well.

Alliance Capital, New York, will also enjoy expanded distribution through the combined banks' network of about 1,000 brokers.

Others were not so lucky: OppenheimerFunds of New York, one of the biggest fund sellers through banks, failed to make it onto the list. OppenheimerFunds is on the bank's "B list," meaning its wholesalers will have limited access to the brokers and its funds will not be sold as aggressively.

BankAmerica, Charlotte, N.C, declined to comment on the list, which was obtained by American Banker this week. It became effective Jan. 4.

Mutual fund executives said the new list more closely resembles NationsBank's than BankAmerica's, reflecting the dominant role of NationsBank's retail brokerage business in the merger.

The two banks' retail brokerage operations, which are operating independently, are to merge in July. The combined brokerage is expected to report to Henry Rose, who now runs the NationsBank side.

In 1997, the most recent year for which figures are available, BankAmerica sold $2.1 billion of mutual funds and NationsBank sold $1.3 billion, while all banks sold $31 billion, according to Kenneth Kehrer Associates, a consulting firm in Princeton, N.J.

The concentration of distribution muscle through continuing bank mergers is making competition for the A list spots increasingly intense-and expensive.

To make the list, fund companies often must provide extensive sales training for the brokers.

A-list vendors routinely pay as much as $50,000 per year to be allowed to attend regular meetings of bank brokers, said Mr. Kehrer.

But most fund companies will take such steps to make the A lists because several million dollars of potential sales are at stake.

"It is a strategic imperative," said William O'Grady, the Fidelity Investments executive who oversees sales through banks.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER