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Rating:Wachovia-Wells Deal Would Make a Fund Giant Not Rated 5.0 Email Routing List Email & Route  Print Print
Wednesday, October 08, 2008

Wachovia-Wells Deal Would Make a Fund Giant

Reported by Erin Kello

If the Wachovia-Wells Fargo deal goes through as planned, it will create a new top 20 mutual fund firm with 208 funds and distribution via bank branches and independent and retail advisors.

The merger would mark the latest in a long line that formed the two fund shops. Wells bought several asset managers over the years, including: Sife Investment Management in 2001; Montgomery Funds in 2002; Benson Associates in 2003; and Strong Financial in 2004. And what is today Evergreen grew out of Wachovia's acquisition of First Union, which owned the original Evergreen Funds. The fund arm of Wachovia also owns Metropolitan West Capital Management, Golden Capital Management, and has a minority stake in European Credit Management.

According to data from FRC, the deal would combine the $39 billion in mutual fund assets that Evergreen boasts and the $39 billion that Wells Fargo has to create a $78 billion mutual fund complex. Evergreen Investments has a total AUM of over $245 billion, which includes its money market funds as well as institutional separate accounts.

By FRC's count, the AUM of the combined firm would move Wells into the top 20 mutual fund firms in terms of assets. The firm would likely capture the 16th or 17th spot on the list.

On the distribution side, the two fund firms have some similarities. The mutual fund unit at Wells Fargo distributes its 125 funds through Wells' bank branches and independent advisors, as well as traditional brokers and through the retail channel. Evergreen, on the other hand, while distributing some through independent advisors, also reaches out through Wachovia's own wirehouse reps, other national b-ds, and maintains key consultant relationships (Mercer and Watson Wyatt and others) with its 83 funds.

And who's in line to lead this new fund giant? Karla Rabusch currently leads Wells Fargo's unit, but Evergreen's leadership is in flux; Dennis Ferro is scheduled to hand the reins of Evergreen over to distribution chief and Legg Mason veteran Peter Cieszko at the end of the year.

Top 20 Fund Firms Chart
Complex Name AUM as of Aug 2008
1) Vanguard Group$1.04 trillion
2) American Funds$1.03 trillion
3) Fidelity (combined) $812.94 billion
4) Barclays Global Investors $303.73 billion
5) Franklin Templeton Investments $285.54 billion
6) PIMCO Funds $228.76 billion
7) T. Rowe Price Investment Svcs. $215.46 billion
8) State Street Global Advisors $152.87 billion
9) OppenheimerFunds, Inc $146.95 billion
10) Dodge & Cox$137.27 billion
11) Columbia Management Group $121.57 billion
12) Legg Mason $109.02 billion
13) BlackRock $104.12 billion
14) Dimensional Fund Advisors $96.66 billion
15) Janus Capital Group $89.52 billion
16) AllianceBernstein $78.50 billion
17) MFS Investment Management $69.54 billion
18) JPMorgan Asset Management $68.98 billion
19) American Century Investments $66.73 billion
20) Van Kampen Investments $66.49 billion
Source: FRC Data
* The figures include long-term mutual fund assets, excluding money-market funds, as of August 2008

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