THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, June 26, 1996 TAG: 9606260424
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
LENGTH: 41 lines
In mutual funds, bigger is better
Some of the biggest names in the mutual-fund business just grew bigger. Hoping to beat rivals to the punch, Morgan Stanley Group Inc., Merrill Lynch & Co. and Franklin Resources Inc. paid a total of more than $2 billion in the past two days for some of the most famous families of mutual funds. The deals reflect a growing recognition that offering investors a broad array of fund choices is key to surviving in today's fiercely competitive business. Moreover, the eagerness to pay what analysts consider dear prices shows concern that choice properties are going fast. On Tuesday, for example, Franklin Resources agreed to buy famed investor Michael Price's Heine Securities Inc. for as much as $800 million. Price said the managers of his Mutual Series funds will stay on, and their investment strategy will remain autonomous.
His four funds - Mutual Beacon, Mutual Discovery, Mutual Qualified and Mutual Shares - all have been given the top five-star rating for performance by Morningstar Inc., the Chicago-based fund research service. (Associated Press)
Morgan Stanley Group to buy Van Kampen
Morgan Stanley Group Inc. vaulted to the top ranks of the mutual-fund business by buying Van Kampen American Capital Inc., the nation's 20th largest fund family, for $745 million. Morgan Stanley also will assume $430 million in debt in the deal with Clayton Dubilier & Ripe, the controlling shareholder in Van Kampen parent VK/AC Holding Inc. If approved, the purchase means the big investment bank manages $157.3 billion worth of assets, up from $100 billion and padding its narrow lead over Smith Barney Inc. as Wall Street's No. 2 money manager behind Merrill Lynch & Co.
The deal also would help Morgan Stanley catch up to other leading players in the lucrative mutual-fund business, where industry behemoths like Fidelity Investments and Vanguard Group vie to manage individuals' money in stocks, bonds and other securities. In exchange, investors pay big fees to the firms. (AP) by CNB