As more brokers and financial advisers seek alternatives to mutual funds for their high-net-worth clients' portfolios, two fund companies are trying to capture assets by introducing individually managed accounts for retail investors.

The companies - Eaton Vance Corp. of Boston and Federated Investors Inc. of Pittsburgh - both have deep and long-standing relationships with banks but are using different strategies to expand their individually managed account businesses through all intermediary channels.

Larry Sinsimer, a senior vice president and managing director at Eaton Vance, said the company plans to build a retail managed accounts business by buying investment advisory firms that offer a variety of investment styles. Eaton Vance will package these into one product, he said, and sell it through its wholesalers.

The company is hunting for one or more investment managers and aims to make its first acquisition this summer, Mr. Sinsimer said.

He said he hopes that Eaton Vance's individually managed accounts program, which it plans to begin after buying an asset manager, will stand apart from those other fund companies offer by combining all, not just one or two, of the available investment styles. Each Eaton Vance salesperson will have to be highly knowledgeable about growth, value, and international investment styles at all capitalization levels, he said.

"The goal is to put together a senior sales force that can sell the asset allocation strategy," Mr. Sinsimer said.

He added that it is more common for fund companies that sell individually managed accounts to have separate wholesalers for each investment style the company offers but that this approach can be hard on specialized salespeople as investment styles go out of fashion.

"It's good to have a single, dedicated sales force that can represent all investment styles," he said, and a packaged product will also help wholesalers keep their clients. "Retention takes 10 times the energy of selling," he said.

Mr. Sinsimer said he plans to hire five salespeople by yearend.

Federated Investors, by contrast, has brought a 30-year-old managed accounts business for institutions into the retail sphere. The Pittsburgh company has historically offered these accounts only to pension plans and trusts, said Timothy Pillion, senior vice president of bank marketing and sales.

Now it is shopping the same customized account management services to retail investors, he said, and using stockbrokers and third-party distributors to sell the program.

To make its product accessible to more high-net-worth people, Federated will reduce its account minimums dramatically, from as high as $10 million to $1 million or less, Mr. Pillion said.

Many high-net-worth investors still like mutual funds, he said, but these portfolios can impose a high tax burden - and wealthy investors want more control over the tax consequences of their investments. Federated, he said, will package its individually managed account program with mutual funds to offer investors a greater degree of diversification and tax-sensitivity.

The company has chosen to sell through intermediaries - both to avoid the expense of setting up its own distribution program and to let brokers and advisers tailor Federated's plan for their clients.

The retail demand for separate accounts has dampened somewhat since last year's market downturn, Mr. Pillion said, but it is expected to grow in the long term. Packaging mutual funds with the separate accounts program will help keep both kinds of products selling when one or the other goes out of favor, he said.

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