The mutual fund company Keystone Investments has filled a high-profile vacancy on its stock portfolio management team.

The $12 billion-asset company, which is set to be acquired by First Union Corp., has named J. Gary Craven, senior vice president, to oversee its flagship Small Company Growth Fund.

Mr. Craven, who began work Monday for the Boston-based fund company, arrives less than four months after its team of stock fund managers resigned and left Keystone's fastest-growing portfolios rudderless.

"I'm excited about the opportunity, but this is a big job, no question about it," he said.

Indeed, over the first nine months of 1996 the performance of the company's Small Company Growth Fund was down 0.8%, Keystone said.

And now it's up to Mr. Craven, 44, a virtual unknown in the fund industry, to turn that around.

Mr. Craven oversaw $860 million in assets in small company pension plansfor Principal Financial Group, an insurance giant in Des Moines.

He also managed two small aggressive stock funds. Charlotte-based First Union, which expects to pay $183 million for Keystone, was attracted in part to the company's stock funds, because they are sold by the nation's largest brokerage firms.

"Keystone had to fill that gap as quickly as possible," said Louis Harvey, president of Dalbar Inc., a Boston-based mutual fund research company.

Mr. Craven replaces Christopher Ely, who in July took with him two portfolio managers to Loomis, Sayles & Co., a much larger shop, also in Boston.

About 18 months before, Keystone lost Roland Gillis, who oversaw the stock fund team until he was picked off by Putnam Investments to manage its well-known Voyager fund.

Mr. Craven is trying to rebuild Keystone's equity staff, searching for three portfolio managers to oversee the $3 billion in assets in the company's Small Company Growth Fund, Small Company Growth Fund II and Global Opportunities Fund.

Keystone has also assigned Mr. Craven to oversee the more than $300 million in assets managed in its coveted Merrill Lynch Consults, a wrap- account program for wealthy investors.

Mr. Craven said Keystone approached him through an executive recruiter. He did not flinch that Keystone will soon be owned by a bank. "First Union is a very dynamic bank," he said. "I think it's on the right track."

First Union's acquisition of Keystone is scheduled to close Dec. 11.

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