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Merrill to Offer Complete Array of 70 Funds to Third Parties

Merrill Lynch Investment Managers (MLIM) has just announced it will offer its complete family of retail mutual funds to third-party distributors under the Merrill name as well as consolidate its two mutual fund families, which includes the Mercury line, into one.

The consolidation will help provide other broker/dealers, wirehouses, insurance companies and banks access to all of Merrill's retail funds for the first time, the company said. The move is awaiting shareholder approval.

A Merrill spokeswoman said the move will allow the company to offer all of its more than 70 MLIM funds, not including its Mercury funds. Merrill currently offers only 11 funds through third-party distributors, she said.

The spokeswoman was unable at press time to provide details on the company's marketing plans or how it expects to combat some negative press created by recent shareholder class-action suits.

Merrill claims the move will allow third-party clients to invest in a wider array of mutual funds, many with lower expense ratios and longer-term track records than current Mercury funds.

"Third-party distribution is a crucial component of MLIM's growth strategy. In terms of breadth and depth of products, few players can offer clients what we can," said Daniel J. Dart, operating chief for the company's third-party retail business, in a statement.

Burton Greenwald, a consultant at the Philadelphia-based B.J. Greenwald & Associates, said the move is part of a strategy Merrill began two years ago, with "limited success." He said some distributors have "misgivings" about Merrill products.

Nonetheless, Greenwald continued, "Merrill has the resources, but they have to have funds that are recognized as top quality. They need strong performance." And that's the caveat. "The key variable is how well the funds perform."

Greenwald said that among other firms currently offering funds via third parties, including UBS Warburg and Prudential, "the best example has been Morgan Stanley Dean Witter, where they successfully kept the Van Kampen brand and made it seem to be a non-MSDW brand and had huge success."