International News 30/03 – Egg offers a full dozen

Prudential’s Egg online banking unit plans to start selling 169 mutual funds from 12 different companies over the Internet, the first fund supermarket for UK investors.

According to a report in the UK's Financial Times, Egg Investments will offer funds from some of Britain's biggest fund managers, including Mercury Asset Management and Schroders. The service will allow investors buy and sell fund shares through the Internet, and get daily information online on their accounts.

The Egg service will compete with US companies such as Charles Schwab and Fidelity Investments, which are developing fund supermarkets in the UK.

Fidelity plans to start a UK supermarket this summer, and Schwab and Interactive Investor International are preparing to introduce competing services by the end of 2000.

About 245 billion pounds was invested in UK managed funds at the end of January.

Experts say Egg will charge fund companies that make their shares available on its system an undisclosed amount based on sales. The Egg service will include 12 funds managed by Prudential's funds management business, M&G Group and will allow investors to trade stocks later this year.

Prudential started Egg in October 1998; investing 150 million pounds in Egg last year which contributed to a 47 percent decline in Prudential's second-half profit.

Prudential says Egg will lose a further 150 million pounds this year and isn't expected to be profitable until 2001 at the earliest.

At the same time Prudential is planning to sell as much as 25 per cent of Egg to the public in an initial public offering later this year.

Experts believe the Internet will account for half of all unit trust purchases by 2003. Fund supermarkets already are available in Germany where New York-based Citigroup is planning to start a service to compete with Deutsche Bank AG's Bank 24 and Consors Discount Broker AG.

Taiwan beckons

ABN AMRO Asset Management (AAAM) is to buy a big majority stake in the Taiwanese funds management group Kwang Hua. AAAM recently bought a 62 per cent stake in the group from Ruentex and 20 per cent from Aetna for a total 88 per cent. ABN AMRO said Kwang Hua has $2.4 billion under management and ranks number six among Taiwanese fund managers. Taiwan has a sizeable investment fund market which is expected to grow by about 50 per cent in the next three years.

Planners hit Web

Financial planning has hit the Internet at full strength, following the launch of Charles Schwab's new initiative Portfolio Consultation and JP Morgan's Internet-based financial planning service.

According to reports from Dow Jones newswires, Schwab's program is the most in-depth financial advice package ever, including investment analysis and recommendations through one-on-one consultations and online tools, with customers paying about US$400 for the advice. Investment specialists will first discuss short- and long-term goals with investors, as well as the clients' current asset allocations. These will be analysed and compared to a model asset allocation. At the same time, Schwab will offer customers access to various online tools and workshops that teach investors how to plan, research, trade and manage their portfolios.

Index fund growth

UK investors are streaming into index funds, betting the bubble formed by telecommunications and Internet stocks won't burst anytime soon. Index fund purchases now comprise about 7 per cent of the new money that flows into UK managed funds, up from 3 per cent in 1994, according to the industry trade group Association of Unit Trusts and Investment Funds. UK investors shovelled more than (pound mark) 2 billion into index mutual funds in the 12 months to January.

Exchanges merge

The Paris, Brussels and Amsterdam stock exchanges are to combine operations into a company called Euronext, becoming Europe's second-largest stock market. According to the Wall Street Journal, the merger is being driven by pressures to reduce trading costs and consolidate a bevy of national exchanges following the launch of the euro. Euronext will have a stock-market capitalisation of 2.4 trillion euros, putting it behind the London Stock Exchange, with 2.8 trillion euros, but well ahead of German bourse with 1.4 trillion euros. The combined exchanges will continue to operate trading floors in France, the Netherlands and Belgium, and each will be listing the stocks of its partners. The three plan to complete the merger by September, with full technical integration in a year.