The two executives who will take over Aim Investment Management's money market fund unit next month hope to increase the awareness of Aim's presence on Internet cash management sites.
Aim plans to advertise its products' online availability more prominently at trade shows and in its marketing materials, said one of the execs, Bill Hoppe. He also said he intends to advertise on the sites themselves in the future, if the sites' sponsors will allow it. None of them currently do.
The three sites now in existence - Bank of New York Co.'s moneyfundsdirect.com, SEI Investments Inc.'s Treasurypoint.com, and Goldman Sachs Group Inc.'s Global Cash Services - help banks, insurance companies, and other financial institutions manage short-term cash for themselves and their clients. The sites were all rolled out this year.
The sites offer institutional investors products from Aim and about a dozen other providers, including Federated Investors, BlackRock, Fidelity Investors, Alliance Capital Management, and Goldman.
Portals are still a comparatively small part of the overall cash management business - of the $2.12 trillion of money fund assets across the industry, SEI's and Bank of New York's portals each have balances of slightly over $1 billion. (Goldman did not return calls asking for the balances in its portal.)
However, Mr. Hoppe said he expects that they will account for a much bigger portion of the business in the future. And even though he said he doubts that any new portals will be launched, Aim plans to make its funds available on any that are.
Aim announced on July 31 that Mr. Hoppe and Karen Dunn Kelley would succeed J. Abbott Sprague, the president and the director of institutional marketing of the $73 billion-asset unit, Fund Management Co. Mr. Sprague, who helped found Aim's money market funds complex and ran it for the past 21 years, will retire.
Ms. Kelley, Aim's chief money market and securities officer, will become the unit's president on Oct. 1. She said she wants to focus on the cash management sites because they are "one of the great places for growth in the money fund market."
Mr. Hoppe, the unit's national sales manager, will become its director of institutional marketing. He said Aim will not let the Web efforts dilute its attention to its traditional sales channels - banks and brokerages. Those channels are substantial sources of growth, and they will continue to be, he said.
He also said he doubts that any new portals will be launched. The three already in place are sophisticated enough to crowd out any new offerings, he said.
In addition to money fund products, the three sites offer analysis, cash management tools, and other services that would make it more difficult for a new portal to improve upon enough in order to attract business, he said.
According to Aim, between June 1999 and June 2001 the company added $45.5 billion to its institutional money funds
Aim's historically high money fund performance - its money funds had the fourth best yields of any institutional money fund over the past five years, according to money fund analyst Imoneynet.com - will help the company boost its market share of sales through these sites, he predicted.
Companies consider factors other than just yields when buying money funds - such as their other relationships with an institution, how long they plan to invest the money, and the risk of the underlying investments - but higher yields are still one of the most important factors, Mr. Hoppe said.
Peter Crane, the managing editor of iMoneynet, a Westborough, Mass., money market fund analysis company, said that despite the fact that the yields from different money funds generally are within a few basis points of each other, a small difference can be significant when large sums of money are traded.
Mr. Hoppe said money fund yields are measured in small increments over long periods of time, but even being slightly ahead of a competitor can help attract business. "If three people meet a bear in the woods, I don't have to outrun the bear to win. I just have to outrun the other guys."
Mr. Crane said that Aim's performance in yields had made it the fastest-growing money fund complex recently. Between the middle of 1999 and the middle of this year Aim attracted $50 billion of new institutional assets, he said.
Low expenses contributed to that growth, he said. The average Aim money fund carries a 9-basis-point fee, versus the 31-basis-point industry average for institutional money funds, he said.
But Aim is facing some cost competition. A spokesman for Reserve Funds, a New York company that created the money market fund in 1971, said it recently launched an institutional fund with an 8-basis-point fee to get a share of that low-cost business.
Mr. Hoppe said that yields alone cannot always spur growth. Even many of institutional investors who use the Internet to comparison-shop by price and yield value relationships with their money fund providers at least as much as returns, he said.
