Joining a growing industry trend, Great' Western Financial. Corp. has given its proprietary mutual fund customers the option of deferring sales charges.
The addition of the back-end-load option is the latest step by the Chatsworth, Calif., thrift to expand the appeal of its Sierra Trust Funds, which have $2.9 billion of assets.
Great Western, which has offered the funds chiefly to its branch customers, wants to increase sales through brokerage firms, financial planners, and financial institutions. The deferred-payment option could be a big help in that effort.
"There are brokers and customers who under no circumstances want to pay an up-front load," said David J. Schulman, national sales manager for Sierra Investment Services, a Great Western unit.
Bid for More Business
Until now, Great Western offered investors one method of paying for their funds: a 4.25% up-front fee.
By adding the back-end loads, Great Western is joining banks like Keycorp that feel they can boost business by supplying investors with more purchase options.
The fees begin at 5% and decline annually, allowing investors to pay no purchase charge if they hold the funds for six years.
Mr. Schulman said the loads, though introduced less than two weeks ago, have already generated business that Great Western would not otherwise have snared.
Great Western relies on 500 sales representatives to offer the 15 Sierra funds through the savings bank's 450 branches in California and Florida.
But the thrift has set its sights on new outlets.
"Clearly, financial institutions are gaining more market share" as fund sellers, Mr. Schulman said. "They represent a significant opportunity for us to distribute our mutual funds."
Executives at Great Western feel that cracking the bank market may end up being easier than placing the products with brokerages.
"There's a natural affiliation," said F. Brian Cerini, chairman of Great Western Investment Management. "Great Western has quite a bit of experience dealing with bank customers."
The thrift has already signed a couple of financial institutions, including First Alabama Bank.
The bank, based in Montgomery, was attracted by Great Western's asset-allocation services, said Wayne Adkinson, president of FA Investments, the bank's brokerage.
Great Western uses a mix of its stock, bond, and money market funds to create asset-allocation portfolios that are in sync with market conditions and customers' investment objectives.
"It's the kind of product we've seen a lot of demand for," Mr. Adkinson said.
In addition to courting individual banks, Great Western is hooking up with investment product marketing companies that distribute mutual funds through scores of financial institutions.
