Moving to position itself as a national mutual fund player, NationsBank Corp. will make its mutual funds available through Charles Schwab & Co.'s popular fund network, OneSource.
Tuesday's announcement comes just weeks after NationsBank laid out plans to launch its own mutual fund distribution service, or "supermarket."
NationsBank said it will offer seven of its 44 proprietary funds through the Schwab network. Earlier this year, NationsBank began offering its funds without service fees - or "loads" - paving the way for it to join a fund mart.
The moves signal the Charlotte, N.C.-based bank's desire to become a major player in the mutual fund business. When it completes its acquisition of St. Louis-based Boatmen's Bancshares, NationsBank will boast more than $23 billion in proprietary mutual fund assets, making it the fourth largest bank-manager of funds.
By joining the Schwab network, NationsBank will give its NationsFunds national distribution. Schwab's OneSource offers about 500 no-load fund families to fee-based financial planners, and a more limited menu of funds directly to the public.
"Anyone serious about the no-load business has to be on OneSource," said Kenneth R. Hoffman, president of Optima Group, a consultancy in Fairfield, Conn. Some 25% of no-load net sales are through the network and similar distribution channels, Mr. Hoffman said.
"I would recommend this to other banks who want to be in the business," he added.
NationsBank's own fund supermarket, Fund Solutions, targeted for an October launch, will appeal primarily to the bank's existing customers, rather than to new investors, Mr. Hoffman said. But he added that NationsBank should be wary of confusing the marketplace by making two similar announcements timed so closely together.
But NationsBank wants its funds to be available through whatever venue investors choose, said Robert Gordon, senior vice president and director of marketing of NationsBank Advisors Inc.
"Distribution is the name of the game," he said.
Mr. Gordon said NationsBank is eager to take advantage of Schwab's relationship with more than 5,000 fee-based financial planners. It is also in negotiations with other broker-dealers to carry the NationsFunds, he added.
NationsFunds are also available through FundsNetwork, Fidelity Investments' supermarket.
Other banks that offer their funds through Schwab's OneSource include First Union Corp., Bankers Trust Co., Mellon Bank Corp., and Signet Financial Corp.
"NationsBank is showing they want to be a big mutual fund player, not a big bank mutual fund player," said Joy P. Montgomery, a consultant at Money Marketing Initiative, Morristown, N.J.
In addition to a beefed-up mutual fund complex, the Boatmen's acquisition would give NationsBank a trust and asset management division with $111 billion of assets under discretionary management, creating the sixth-largest asset management business owned by a North American bank.
A spokesman for San Francisco-based Schwab said NationsBank's decision to join OneSource indicates the strength of the network's distribution.
When asked about NationsBank's own supermarket, Thomas Taggart, Schwab's spokesman, laughed and said, "It's a free market."
Scott Hensley contributed to this report.