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Loading Up On No Loads


Finance: MUTUAL FUNDS

LOADING UP ON NO-LOADS

American Express launches 13 funds a la Schwab

With 6,000 or so mutual funds out there, about the last thing the U.S. needs is more funds. But American Express Co. doesn't see it that way. On May 15, the financial services giant launched the Strategist family of 13 no-load funds.

This is no startup. These funds come with track records--some of 15 years or more--since all but the money-market fund are really IDS mutual funds repackaged under a new name. The IDS funds, managed by American Express Financial Advisors, are sold with a load by financial planners. These Strategist funds will have the same portfolios but will be sold direct to investors without sales charges.

CONSOLIDATING. The move into no-load funds is a key piece of a larger program called American Express Financial Direct, which aims to integrate mutual funds, discount brokerage, financial advice, mortgage, and credit services under one account. "People want to consolidate all their activity on one statement," says William J. Heron, president of Financial Direct.

AmEx borrowed the fund network idea from Charles Schwab & Co. Besides its own funds, it offers nearly 60 no-loads managed by Founders, INVESCO, and SteinRoe--and plans to add more nonproprietary funds later on.

AmEx's new plan is an "interesting development," says Kurt Cerulli, whose Cerulli Associates Inc. performs consulting work for financial services companies. "They're starting with a proven fund-management company, and adding the outside funds gives them credibility," he says. "But how well it does will depend on marketing."

AmEx is no slouch at marketing. If it can figure out a way to award frequent-flier miles to investors as it does to charge-card users, Financial Direct should be a hit. Wouldn't it be nice to roll over your IRA and earn a pair of tickets to Hawaii? Says Norma J. Arnold, senior vice-president of Financial Direct: "We're thinking about it."

For more mutual fund information, go to keyword Morningstar.By Jeffrey M. Laderman in New York


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