Stock in online brokerage E-Trade soared Friday after the online brokerage filed to launch its own no-load index mutual fund - the Internet's first electronic-only index fund.
E-Trade (EGRP) on Friday also announced that it's linking up with money manager Barclays Global Fund as part of its move into the asset management business. Shares climbed 2 1/4 to 23 1/4.E-Trade filed with the Securities and Exchange Commission (SEC) on Thursday to create the new fund, to be called the E-Trade S&P 500 Index Fund. Barclays, the world's largest institutional investment manager, has been retained as a sub-advisor and will manage the assets of the fund, said Brian Murray, general manager of the brokerage's Mutual Fund Center.
The company filed a second document with the SEC to allow it to create E-Trade Asset Management to manage the funds.
E-Trade expects to offer investors the index fund product by early next year. The brokerage currently offers a selection of over 4,000 mutual fund investment options.
There are clearly plans to bring out other fund products.
"We're starting off with one fund. Certainly nobody launches (an asset management company) with one fund," Murray said. It's not a "given" that Barclays will manage any future funds that E-Trade may launch, he added.
But Barclays should grant E-Trade an international entree. The online brokerage is currently operating in Canada and Australia. Barclays Global Investors has over $500 billion in assets under management.
No details explaining the financial relationship between the two companies were released.
"Through E-Trade, retail investors will be able to tap into a breach of portfolio management experience and operational scale normally reserved for institutions," said Barclays Lawrence Tint, head of Global Client Relationships.
Written by Emily Church