Expect to see a growing number of firms that sell mutual funds to start getting rid of their asset-management firms. Citigroup did it last year in a deal with Legg Mason, and Merrill Lynch is in serious talks with BlackRock to do the same. According to MarketWatch, this trend is motivated by two factors: firms’ desire to eliminate possible conflicts of interest that may arise when brokers promote and sell their own funds, and to make it easier for fund firms to sell their products to third-parties, which otherwise would be reluctant to push investment instruments bearing a potential competitor’s name.
“You are going to see a flood of deals from insurance companies and banks that started proprietary fund families and have been unable to successfully distribute them through their captives sales organizations,” consultant Burton Greenwald of Philadelphia told MarketWatch.
