Universal Network Exchange, an Internet broker that builds personalized portfolios, plans to take on the fund industry by offering its services to retail customers.

Matt Ridenour, chief executive officer of the Los Angeles start-up, said it will enter the retail marketplace this fall. One way it will do this is through a deal with an online bank that Mr. Ridenour is talking with now. He would not identify the bank.

The company aims to grab business from mutual funds by offering a cheaper and more tax-efficient means of building a stock portfolio. "Mutual funds and index funds will change dramatically over the next 12 to 18 months," Mr. Ridenour predicted.

Universal has been in business since October 1999 and says it is trading more than a million shares a day. Users of its system can customize baskets of stocks and trade them at any time.

The baskets are similar to exchange-traded or index funds, except that the investor can add or eliminate securities at any time. Universal automatically calculates the portfolios' net value and scans the market to purchase the securities at the best available prices.

The transaction usually is cleared within 30 seconds, said Mr. Ridenour, who boasts that speed as well as price gives his company an edge. Its technological base allows Universal to process trades in seconds, and its market links help it fetch stocks at prices better than the prevailing spread nearly 50% of the time, he added.

Univeral's trading platform is hooked into all the major electronic communication networks, including Island ECN, Instinet, and Readybook, Mr. Ridenour said.

The company is betting that retail customers will be attracted to its services to get better deals with mutual funds, Mr. Ridenour said. In the trader market, it gets commissions of 2 to 3 cents per share instead of charging an advisory fee. Over time, that comes to about half of what a mutual fund charges, Mr. Ridenour said.

Universal has not determined whether it will maintain its current fee structure when it breaks into the retail market, Mr. Ridenour said. That decision depends in part on the arrangement his company works out with the online bank.

Last week Universal announced a partnership with Trust Company of America, an Englewood, Colo., clearing service for investment advisers, to create a version of Universal's product geared to such advisers.

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