The assets in Charles Schwab's Mutual Fund Marketplace dipped 5.6 percent in the fourth quarter, even as the broker added 93 new funds from 29 complexes to OneSource. Nonetheless, assets in its proprietary funds grew 3.9 percent during 2000's final quarter.

Although some advisers have accused Schwab of avariciously eyeing their clients' assets, the firm's success in a down market is not the result of predatory practices, but rather the conservative asset mix in Schwab's funds. Roughly $140 billion of fund assets at Schwab are now invested in its SchwabFund and Excelsior Fund (previously U.S. Trust) families. Of that, money market funds held $109.4 billion, over three-quarters of the total.

Money market funds, the firm's cash cow, rose from $103.1 billion at the beginning of the year, offsetting losses in Schwab's other funds. Overall, assets in Schwab's proprietary funds rose by $5.3 billion from $134 billion at the end of September. At year-end 1999, assets in its proprietary funds totaled $117 billion.

David Pottruck, co-CEO of the San Francisco-based firm, told investors that assets in OneSource's third-party funds totaled $98 billion at the end of the year. This was a decline of 11.5 percent from $116 billion at the start of the quarter.

The retail channel of OneSource was hit hardest. Its assets fell to $51.9 billion from $63.6 billion in September and $55.4 billion at the start of the year.

Institutional OneSource assets, which includes assets custodied for investment advisors, fell to $46.4 billion from $52.7 billion three months prior. This was higher than the $45.6 billion in the Institutional Channel as of December, 1999. Altogether, Schwab offers 1,280 funds in OneSource, including 44 proprietary SchwabFunds.

Across all channels, Schwab had $330 billion in mutual fund assets under its roof, a decline from nearly $350 billion at the end of September. A spokesperson for the firm explained that the decline was primarily a result of market depreciation. Schwab claimed $294 billion of mutual fund assets at the end of 1999.

Besides the money in OneSource, $71 billion was invested through non-Schwab funds in the Marketplace, down from $76.5 billion the quarter before. An additional $21 billion were in the brokers clearing service which handles accounts for other financial services institutions offering funds. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE