Magazine article American Banker

Sanwa Will Package Own Funds and Others' in New Wrap Account

Magazine article American Banker

Sanwa Will Package Own Funds and Others' in New Wrap Account

Article excerpt

Sanwa Bank California, a latecomer to the proprietary mutual fund game, last month began offering an asset allocation account to attract customers.

Active Asset wraps around various combinations of Sanwa's four proprietary Eureka mutual funds, along with 11 funds from Dreyfus Corp., a unit of Mellon Bank Corp. The account asks for a minimum investment of $25,000.

Sanwa, an $8.1 billion-asset subsidiary of Osaka, Japan-based Sanwa Bank Ltd., opened proprietary retail funds last month. Sanwa executives hope the asset allocation account will speed things along.

Eureka Funds are expected to make up 40% to 50% of U.S. mutual fund sales at Sanwa in three to five years, according to Michael Boulden, vice president in charge of investment services. Last year the Los Angeles-based bank sold about $55 million of U.S. funds from Franklin Resources, MFS Investment Management, OppenheimerFunds, Putnam Investments, and Van Kampen American Capital. Loose sales of Eureka Funds are expected to be less than packaged sales of the funds within the Active Asset wrap account.

"The asset allocation product is probably going to be the dominant seller of the two," Mr. Boulden said. "As the program grows, that will become probably our largest single product sale."

Investors receive advice on different no-load mutual funds in a wrap account.

Annual advisory fees and expense ratios on the accounts average about 2.2% of net asset value, according to Cerulli Associates, a fund research firm in Boston.

Mutual fund wrap programs at banks are often limited to proprietary funds. Besides Sanwa, other exceptions are found at Cleveland-based KeyCorp and San Francisco-based Wells Fargo & Co.

Several banks, including Bank of New York Corp. and Kansas City, Mo.- based Commerce Bancshares, have asset allocation accounts that wrap around proprietary funds only. …

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