The parent company of several mutual fund families has formed a new distribution unit to market its products to investors through wrap programs.
CDC Ixis Asset Management North America, the Boston parent of such fund families as Oakmark Funds and Loomis, Sayles & Co., has created CDC Asset Management Intermediary Services. The unit combines the marketing and strategy elements of the company's three previously separate distribution arms, said Douglas DuMond, president of the new unit.
In creating the new unit, the company hopes to improve sales of its 14 no-load fund families, and add roughly $1.8 billion this year in new flows to its books, up from $1.2 billion last year, Mr. DuMond said. Despite this, the company does not anticipate widespread growth in sales through banks.
The asset manager, a subsidiary of the Paris-based bank CDC Ixis, is anticipating the day when banks develop mutual fund wrap accounts in the same way as their competitors at brokerages and insurance companies, said Hugh Kelly, senior vice president of the new unit.
Mr. Kelly said that in forgoing commission loads in favor of wrap programs, the company is positioning itself to ride a growing trend.
By way of evidence, Mr. Kelly cited a report by Strategic Insight, a New York fund consulting group, which showed that investors opened more than 400,000 new mutual fund wrap accounts in 2000, up more than 50% from the year before. Avi Nachmany, director of research at Strategic Insight, said that these types of accounts - both old and new - saw inflows of $50 billion, also double the previous year.
But for now, the company is focusing most of its marketing efforts on broker-dealers, retirement plans, and financial planners since very few banks have established viable wrap account programs, Mr. Kelly said.
"First Union does an exceptional job. They're the premier bank wrap on the street," Mr. Kelly said. "After that it starts getting real thin."
Though the company has sales staff focused on banks - and still has different sales channels for retirement plans, brokers, and financial planners despite the creation of the new unit - it will not push heavily to expand through other banks on a wide scale until more banks "get serious about the [wrap] business," Mr. Kelly said.
The mutual funds which the company distributes have, in total, $135 billion in assets under management.
The company's growth targets will likely be boosted by the fact that at least some of its fund families have already seen robust growth levels early in the year. For example, Boston-based Oakmark Funds - itself a subsidiary of Chicago's Harris Associates - was the sixth-best selling fund family in February, bringing in $381 million in new assets, according to Financial Research Corp. in Boston. The same fund family saw outflows of $5.9 billion in 2000.
Oakmark was also the top-selling fund family through Charles Schwab & Co.'s fund supermarket in February, Mr. Kelly said.
CDC Ixis counts many of the largest brokerages, insurance companies, and banks among its clients, including First Union, Charles Schwab, Citistreet, Fidelity Investments, Salomon Smith Barney, and others, Mr. Kelly said.
The company also has subadvisory and variable product agreements with Ameritas Life, CIGNA, MassMutual, MetLife, New England Financial, and Great West.
CDC Ixis Asset Management North America was previously Nvest Cos., until it was bought by CDC Asset Management of Paris in November for $2.2 billion.
