Banks are not alone in offering third-party mutual funds to keep their customers' assets-insurers are doing it too.
Last week Nationwide Financial Services Inc., Columbus, Ohio, launched PortfolioSelect, a mutual fund supermarket aimed at retail investors.
The program offers 21 third-party funds from four fund families: Fidelity Investments, Dreyfus Corp., OppenheimerFunds Inc., and Nationwide's own fund family.
PortfolioSelect is available through Nationwide Advisory Services Inc., the company's mutual fund subsidiary, and Public Employees Benefit Services Corp., a Nationwide company that offers services to public employees.
"What you're seeing is an attempt by formerly single-line players, like insurance companies, to branch out into other lines of asset-gathering products," said David Kaytes, an insurance analyst with First Manhattan Consulting Group in New York.
Other insurers, like Prudential Insurance Co. of America, Newark, N.J., and Cigna Financial Services, Hartford, already offer similar programs through their brokerage subsidiaries. Their programs are larger than Nationwide's new effort.
Cigna's CignaSource mart, for example, offers 4,000 funds, including 350 no-load funds, while Prudential's PruChoice program offers approximately 300 funds, half of which are no-load.
For now, Nationwide will stay small and stick with load funds, said James F. Laird, vice president and general manager of Nationwide Advisory Services.
"It's the first major nonproprietary fund product that we've brought out to our retail channel," said Mr. Laird.
But, he added, "we certainly don't want it to be static."
Indeed, Nationwide might look at offering a "pseudo no-load," or mutual fund wrap program, down the road, he said. The insurer may also add more funds, although Mr. Laird said he believes those available now represent a broad offering.
However, Nationwide will not be looking to go head-to-head with firms like Charles Schwab & Co., said Mr. Laird.
"Some people want Schwab and it's a wonderful product, but there's probably as many or more people that would be totally overwhelmed by that many choices," he said.
Still, the supermarket concept - even on a small scale - is a defensive move, said Burton J. Greenwald, a mutual fund analyst in Philadelphia. It is designed to prevent clients from "emigrating to Merrill Lynch, Charles Schwab, and Fidelity," he said.
Separately, Nationwide said it restructured its mutual funds. The insurer now has eight mutual funds, with $4.5 billion of assets under management. They are available with an A share class, front-end load, and an B share class, back-end load.