A small Illinois banking company has big plans for gaining nationwide distribution of its proprietary mutual funds.
Officials with $2 billion-asset Amcore Financial Inc. confirmed that it is negotiating for its Vintage Funds to be sold through the discount brokerage network of giant Charles Schwab & Co.
Patricia M. Bonavia, vice president and product manager for Amcore Capital Management, said she expects her funds to be on the Schwab system by yearend. Schwab now sells the funds of only two banks, both much larger than Amcore.
It's an ambitious plan for Rockford-based Amcore, whose funds are little known outside Illinois and face stiff competition from established no-load fund families already on the Schwab system.
"It's not going to be easy for them," said Avi Nachmany, a partner at Strategic Insight, a New York-based mutual fund researcher. "Amcore is not perceived as having the expertise in money management."
It will be fighting for market share from mutual fund giants such as Janus Capital Corp., Twentieth Century Cos., and Invesco FundsGroup Inc., to name a few. Wells Fargo & Co., and Bankers Trust New York Corp., also sell funds through San Francisco-based Schwab.
Amcore's four proprietary Vintage Funds are relatively small with $366 million of total mutual fund assets under management as of Feb. 28, according to Strategic Insight. The fund offerings consist of equity growth, fixed-income, money market, and municipal bond. None of the funds charge a sales fee.
Vintage's equity growth fund is among the top 10 best performing equity growth followed by Lipper Analytical Services, New York. Through March 31, the fund paid an annualized return of 15.74%.
Not surprisingly, the equity growth portfolio is the first to be considered for distribution through Schwab, said Ms. Bonavia. "We've had a lot of institutions outside our marketplace that are interested in our equity fund and have asked for it to be sold through Schwab.
The equity fund will first be distributed through Schwab's OneSource network, which is utilized by more than 4,000 fee-based investment managers and pension administrators, a spokesman for the brokerage firm said.
Ms. Bonavia said the employee benefits market will be the focus of the Amcore's marketing strategy, but declined to give further detail. Pension assets make up 95% of Amcore's total mutual assets, she said.
Tapping into Schwab's customer base is a potential coup for Amcore. But experts say it may come as a price. The bank will have to pay Schwab between 25 and 35 basis points of any assets gathered, a spokesman for the firm said.