Though Firstar Corp. is buying U.S. Bancorp, Firstars $16 billion family of mutual funds will probably use U.S. Bancorps better-known fund name, analysts say.
And the sizable distribution network of Minneapolis-based Piper Jaffray the brokerage arm of U.S. Bancorp will provide a much broader potential market for Firstars family of mutual funds.
Milwaukee-based Firstar will determine which funds will stand alone and which funds will merge. However, it will not give its own funds preference over Piper Jaffrays $34 billion-asset First American family of mutual funds, said Eric Rothman, analyst at First Security Van Kasper in San Francisco.
Firstar has always chosen to lead with the best products available after a buyout, Mr. Rothman said. That way youre always leveraging up your capabilities.
Burton Greenwald, a mutual fund consultant based in Philadelphia, said Piper Jaffray will push only those Firstar funds that have that have performed well for a long time.
Analysts said that Firstar has many such funds, but that its track record will probably improve when redundant or underperforming funds are combined with stronger First American funds. But few of the funds will be redundant.
Firstar and First American, which will have a combined $50 billion of assets under management, will have more redundancy in back office systems, said James Bradshaw, an analyst at D.A. Davidson & Co. in Portland, Ore. Piper Jaffrays management is likely to wind up running the combined unit, as it is the larger and more profitable of the two fund groups, he said.
Its too early to tell which funds or advisers will be eliminated, said Mr. Rothman. Nonetheless, most observers expect Firstars name to be eliminated in favor of Piper Jaffrays over time.
There will be little overlap in the investment strategies of the banks fund units, analysts said. First Americans tends to be more growth oriented, while Firstar has a stronger fixed-income management department, Mr. Bradshaw said.
The combined unit will be the countrys seventh-largest mutual fund processing company and will have 45 mutual funds with four-star or five-star ratings from Morningstar.
Firstars small but growing high-net-worth business will also benefit from U.S. Bancorps size and experience, said Jon Arfstrom, an analyst at Dain Raucher Wessels in Minneapolis.