In the quest for assets, Michigan National Corp.'s Independence One Mutual Funds have an unusual advantage over other small fund groups.

The Farmington Hills-based banking company is eyeing its corporate parent, Melbourne-based National Australia Bank Ltd., as a doorway to the growing Australian mutual fund market.

The initial plan would be to add Michigan National's Equity Plus Fund to the roster of National Australia's retirement products, said Robert J. Stapleton Jr., director of investment services and chief investment officer. (Equity Plus, which has a four-star rating from fund-tracker Morningstar Inc. of Chicago, is the top performer among Michigan National's three equity funds.)

Demand permitting, Mr. Stapleton said, he would also try to get National Australia to sell the $1.6 billion fund group on a retail basis.

These plans are on hold, however, so that National Australia can digest the acquisition planned for this month of MLC Ltd., the fund management and insurance arm of Melbourne-based Lend Lease Corp. All the asset management businesses of National Australia and its subsidiaries are being placed under the MLC umbrella, and Mr. Stapleton said he had not yet spoken to MLC about distributing the Independence One Funds.

Australian distribution could give the tiny fund group a big boost, Mr. Stapleton said.

A recent study by the Boston-based consulting firm Cerulli Associates predicted that the Australian mutual fund market will grow from $350 billion of assets at the end of 1999 to $650 billion by 2004. Retirement plans, which are mandatory, will account for much of that growth, said Cerulli managing director Ben Phillips.

"There is a demand for U.S. securities in Australia, but there are also a lot of players there," Mr. Phillips said.

Revisions made last summer in Australia's tax code made it much less expensive to invest in U.S. mutual funds, and asset managers such as Merrill Lynch & Co. and Alliance Capital have begun selling their funds there. MLC has a joint venture with Valley Forge, Pa.-based Vanguard Group to offer investment options to retirement plan sponsors in Australia.

Meanwhile Michigan National is taking most of the steps other small fund groups are taking for growth. This month the Equity Plus Fund is to appear in Charles Schwab & Co.'s OneSource fund supermarket. Michigan National has also added load classes to the portfolios to make them more appealing to brokers.

The group is also contemplating new funds; possibilities include technology, mid-cap, and Asia-Pacific portfolios, which would be subadvised by National Australia. The parent already subadvises Michigan National's International Fund.

An advertising campaign last autumn brought in nearly $750,000 of assets, said marketing manager Katherine M. Gelement. Portfolio manager Bruce N. Beaumont predicted that the group will reach $2 billion by yearend and $4 billion to $5 billion a year later.

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