The planned integration of JPMorgan Funds with the One Group of mutual funds will let the company focus on expanding its institutional money market fund and unified managed account businesses and on continuing to target mass-affluent clients, the fund units' chief executive said Thursday.
George C.W. Gatch, the chief executive officer and head of U.S. mutual funds and financial intermediaries at JPMorgan Fleming Asset Management and CEO-designate at Banc One Investment Advisors, said in an interview that "our extensive distribution capabilities" let JPMorgan Fleming market to a range of customers from those with accounts holding $1,000 to those with more than $10 million invested.
He emphasized, however, that JPMorgan Fleming is committed to both its institutional and retail businesses and wants to remain a presence in all major markets. "High-net-worth clients are not the only target segment," he said.
J.P. Morgan Chase & Co.'s July 1 purchase of Chicago's Bank One Corp. created the opportunity to merge the companies' fund groups. Their integration is expected to be completed in February, Mr. Gatch said. And at July 31, the two together were, pro forma, the fifth-largest fund company in the country, with about $210 billion of assets under management.
Mr. Gatch said the company is focused on integrating the fund operations but is always looking at acquisition opportunities. It plans to ask shareholders in January to approve melding overlapping fund portfolios and adopting a common fee structure.
Though high-net-worth clients are attractive to JPMorgan, it is not limiting its marketing efforts to this group, which it defines as investors having more than $10 million of investable assets. One way to attract assets besides competing in the highly rivalrous high-net-worth arena is to court the massaffluent, Mr. Gatch said. "They are a very important group to work with. We hope to grow their presence," he said.
"The U.S. marketplace is highly competitive," Mr. Gatch said, naming Fidelity Investments, Vanguard Group, and OppenheimerFunds in particular.
"The integration will provide both fund families' shareholders more investment choices," he said, "and expanded research and portfolio management resources."
Unified managed accounts are an interesting investment platform for JPMorgan Funds, said Mr. Gatch. "We have participated in managed accounts over the past few years, and we grew that business fairly rapidly," he said.
JPMorgan Funds started offering unified managed accounts two years ago and now has $2.8 billion of assets in the product, in 13,000 accounts, he said.
"It continues to be on our radar screen," said Mr. Gatch.
He was named president and CEO of One Group Mutual Funds this week and is to take the helm Sept. 15, succeeding David Kundert, who is retiring.
Before the December 2000 merger that created J.P. Morgan Chase, Mr. Gatch was president and CEO of DKB Morgan, a Japanese mutual fund company that was a joint venture between J.P. Morgan & Co. and Dai-Ichi Kangyo Bank.
Once Morgan Chase and Bank One are fully integrated, the resulting company's global reach will include more than $700 billion of assets under management. At July 30, it said, JPMorgan Funds had $108 billion of managed assets in 67 portfolios, and One Group had $101 billion in 49 portfolios.
