Smith Barney Adds No-Loads

Sat., June 15, 1996

Tom Quinson Bloomberg Business News

Smith Barney Inc. said it will give customers access to 400 “no-load” mutual funds, breaking from the ranks of Wall Street firms that only offer funds with sales commissions.

Until now, Smith Barney brokers have charged commissions to investors who purchase the firm’s proprietary mutual funds and about 2,300 other funds its brokers offer that are managed by outside firms.

Starting July 15, the company said customers will be able to buy a range of other funds managed by 28 investment companies, including Twentieth Century Cos., Dreyfus Corp., Janus Capital Corp. and Neuberger & Berman Management Inc., that charge no sales commissions.

The funds won’t be free of sales fees. Smith Barney said customers will pay an annual fee of as much as 1.5 percent of assets invested to participate.

Smith Barney, a subsidiary of Travelers Group Inc., is the first of the nation’s traditional brokerage firms to offer no-load funds, according to Cerulli Associates Inc., a fund industry research group.

“Others, including Merrill Lynch, are considering similar plans,” said Andrew Guillette, a consultant at Cerulli Associates.

Merrill said no decision has been made in regard to the sale of noload mutual funds. Merrill is “constantly exploring a variety of options with regard to the mix of mutual funds and other products we offer clients,” the company said.

Charles Schwab Corp., the nation’s biggest discount brokerage, has provided customers with easy access to no-load mutual funds for years.

Smith Barney manages almost $75 billion in proprietary mutual fund assets, making it No. 3 among brokerage firms behind Merrill Lynch & Co. and Dean Witter, Discover & Co.

Smith Barney’s decision to give customers access to no-load funds is a sign of the times, as more investors now buy fund shares directly from companies, avoiding brokers and the loads they charge.

Alliance Capital Management LP said last week it’s considering a plan to sell a new class of no-load fund shares. The funds would still be sold by brokers and financial advisers who would charge a fee.

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