E-Trade Group Inc., the Menlo Park, Calif., on-line broker, is launching a program to promote small and "undiscovered" mutual funds.

The funds will be given exposure on-line through events hosted by portfolio managers, dialogue boxes, and marketing materials.

"We want to give smaller, less-favored funds a fair shake," said Brian Murray, general manager for E-Trade's mutual funds group.

Small funds have difficulty getting attention from fund supermarkets such as E-Trade's, which offers about 4,500 portfolios, he said. And investors often have difficulty getting relevant information on these funds.

For example, investors have trouble getting daily pricing information on funds with less than $25 million of assets. So E-Trade is working on a way for investors to check prices by Cusip number, he said.

The incubator program, to be kicked off this summer, will include 40 small funds from those already in E-Trade's fund market, Mr. Murray said, and the program could eventually cover 225 funds.

E-Trade will remain flexible in defining what funds qualify for the program, Mr. Murray said. Funds with assets of less than $50 million fall into the "small " category, he said, though "undiscovered" funds might include contrarian funds with up to $100 million of assets.

Inclusion in the program does not necessarily mean that E-Trade endorses a particular fund. "Some funds are small for a good reason," Mr. Murray said. "You need to make sure (investors) understand there's a higher risk involved."

The program, he said, is "more to say it's worth a look."

Observers said the move is typical of E-Trade's bid to corner the retail investment market.

Richard H. Repetto, a financial analyst at Lehman Brothers, described the program as consistent with E-Trade's strategy to innovate and "offer as wide and complete a financial offering to their customers" as they can.

E-Trade's proposal should set it apart from other on-line fund programs being offered by firms such as Charles Schwab Corp., said Christopher Musto, a senior analyst at Gomez Advisors in Concord, Mass.

"It shows that they're progressive and finding interesting opportunities for their customers," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.