Insurers, banks and other financial services firms spent the Nineties looking for ways to get a foot in on the fund industry, will they spend the Aughties getting that foot out? The latest evidence for those who believe they will was provided Wednesday by life insurance giant Northwestern Mutual Life. The quiet company sold its 11 fund Mason Street family in two separate deals.

The fund family sale is the second this week following Elizabeth Bramwell’s sale of her firm to Sentinel Asset Management.

The Mason Street funds hold $1.3 billion in assets, according to Northwestern Mutual. At that level they would not contribute significantly to the insurer’s bottom line. The insurer created the fund family in 1997.

American Century Investments is taking 10 of the funds with $900 million in assets. Federated Investors picked up the $200 million Mason Street Index 400 Stock Fund said J. Christopher Donahue, president and CEO of Federated Investors. Donahue added that Federated will fold that fund into its Federated Mid-Cap Index Fund.

Neither American Century nor Federated disclosed the price they paid for the funds. Both purchases are expected to be put before shareholders for approval in March.

Typically, funds have been priced between 3 percent and 6 percent of assets, depending on the asset class and sales potential of the fund.

For American Century the purchase is a way for it to leverage its distribution and administration capabilities and expand the range of funds in its lineup. The purchase will also raise the number of load funds at American Century to 25 from 19 currently.

What it will not do in some cases is manage the funds, instead, it will retain Northwestern’s Mason Street as subadvisor to four of the funds. American Century will fold four other funds into its existing offerings and it will retain Templeton Investment Counsel as subadvisor to the International fund.

Mason Street will subadvise Small Cap Growth, Aggressive Growth, Select Bond and High Yield Bond.

Mason Street's Index 500, Large Cap Core, Asset Allocation and Growth Stock funds will be folded into existing American Century funds. 

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