Bloomberg News

LONDON — Merrill Lynch & Co.’s asset-management unit, which is reducing its staff by 20%, may buy a company or hire a team that specializes in running funds for U.S. institutions, said Jeff Peek, the unit’s head.

Merrill Lynch Investment Managers “lacks critical mass“ when it comes to managing growth stock funds and some high-yield fixed-income portfolios for corporate clients and pension funds, Mr. Peek said in an interview.

But in preference to buying a company, he said, Merrill would “like to do some team lift-outs” — that is, hire management teams from companies. While it looks for more clients, Merrill’s fund unit is cutting 900 jobs this year. Fund managers aren’t being fired, Mr. Peek said. Most of the reductions affect administrative-related jobs, he said.

About 180 jobs still need to be cut before Dec. 31, he said.

Merrill is looking to fill a gap in its $525 billion fund-management business as profit from its brokerage unit falls. The New York firm’s first-quarter earnings dropped 21% as falling stock prices reduced trading commissions.

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