Keycorp has joined the handful of banking companies that offer a brokerage account that diversifies assets across a range of mutual funds.

These so-called mutual fund wrap accounts have been available for years, but their popularity has surged over the past year, leading to a flurry of product introductions this year.

Smith Barney is the single largest seller of wrap accounts, which are also offered by the brokerage units of Wells Fargo & Co., PNC Bank Corp., Great Western Financial Corp., and First Chicago Corp., according to Cerulli Associates Inc., a Boston consulting firm. Assets in mutual fund wrap accounts grew 48% in 1994, to $12.4 billion, according to Cerulli.

Keycorp's offering, called Key Managed Asset Program, or KeyMap, allocates assets among a range of funds including Keycorp's own Victory Funds and Fidelity's Advisor family of funds.

The product is aimed at young, affluent customers and pre-retirees, and requires a minimum investment of $25,000, the bank said. The brokerage unit of Keycorp, Key Investments Inc., will handle sales.

Last year, the $67.7 billion-asset company broadened its 401(k) program to include funds from Fidelity and Franklin Resources Inc. in addition to its own.

Several of the wrap accounts offered by banking companies, though not all, allocate assets among third-party funds as well as their own. Including a third-party fund family draws attention to the wrap account, and makes it more attractive, said Glen Casey, a consultant with Cerulli.

"This is a very appealing product," said Anne Figueredo, a principal at the Spectrem Group, a consulting firm based in San Francisco. She said wrap accounts are a way for companies to keep affluent customers within the bank as their needs change and income levels grow.

Brokerage houses have long offered "consultant wrap accounts," in which wealthy customers pay a single fee based on the size of their investment for an asset allocation program tailored to their specific goals.

Retail wrap accounts automate this process, funneling customers into one of a handful of predefined programs geared to different investment goals.

Because the programs are automated, companies can offer the accounts to customers with less money to invest than the traditional programs would allow.

"Wrap accounts are a bridge product between the retail bank and the trust area," Ms. Figueredo said. "They create a life-cycle marketing approach for affluent customers."

Keycorp, based in Cleveland, began offering the account on July 1 and is rolling it out initially in Portland, Ore.; Tacoma, Wash.; and Cleveland. It will be available in all markets in early September.

"We expect this to be an important product for us relatively quickly," said W. Christopher Maxwell, executive vice president of Keycorp and head of the mutual funds program. The company expects to have 10,000 accounts within five years, he said.

KeyMap charges a fee of 1.25% of assets for investments up to $100,000. Fees decline thereafter, but Mr. Maxwell said he doesn't expect larger investments.

Investment executives will call on customers each year to determine whether any changes should be made in investment objectives, such as a new job, a new baby, a new house, or a child's graduation from college.

The account is part of Keycorp's strategy to double corporate-wide profitability by 2000 by targeting selected customer segments, Mr. Maxwell said.

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