Magazine article American Banker

Countrywide Credit to Begin Marketing Mutual Funds in July

Magazine article American Banker

Countrywide Credit to Begin Marketing Mutual Funds in July

Article excerpt

Countrywide Credit Industries, the largest independent mortgage company, is gearing to offer mutual funds to its borrowers.

In July its Countrywide Fund Services will start hawking on a limited basis the fund family it bought last year, said Tom Boone, managing director.

But the Calabassas, Calif.-based lender won't stop there, he said. Eventually it will offer multiple services and products to its institutional clients as well as its mortgage borrowers.

After a failed attempt in 1994 to enter the mutual fund business, last year Countrywide bought Leshner Financial Inc., a Cincinnati-based company with $1.1 billion of mutual fund assets. Lesher also provides fund accounting services.

For now, Countrywide's 6,000 employees can buy the 15 retail funds through their 401(k) retirement plan, Mr. Boone said.

Gareth Plank, an analyst at UBS Securities in San Francisco, predicted Countrywide's larger plan would succeed. Mortgage lenders have more information than other financial services companies-credit card companies, for example-about their customers, he said.

"Can you suggest to someone with $200 extra a month that they were putting toward their mortgage to put that in mutual funds?" Mr. Plank asked. "Absolutely."

He warned, though, that financial service companies should not try to sell all products to all customers.

One mutual fund consultant was more pessimistic. Direct marketing mutual funds to mortgage customers is not a natural form of distribution, said Richard Ross of Fifty-plus Communications Consulting, Glencoe, Ill. …

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