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Portfolio > Mutual Funds

USAA Funds Now Selling on E*TRADE

By Janet Levaux

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E*TRADE’s 2.3 million brokerage investors can now buy 18 mutual funds from USAA, thanks to an agreement announced Friday.

“Investors want easier access to our mutual funds, and our strategy is to give them that access through any channel,” said Dan McNamara, president of USAA Investment Management Company in San Antonio, in a press release. “We’re excited about joining the E*TRADE network and look forward to expanding through additional platforms in the near future.”

E*TRADE investors have about $102 billion in security holdings, up 13% from a year ago, and some 2.7 million brokerage accounts. It has more than 8,000 mutual funds on its trading platform.

The USAA funds now available through the Adviser Share class on E*TRADE include: the USAA Precious Metals and Minerals Fund (USAGX) , USAA Intermediate-Term Bond Fund (USIBX), USAA Short-Term Bond Fund (USSBX), USAA Growth & Income Fund (USGRX) and the USAA Income Fund (USAIX).

According to Lipper, USAGX was the No. 1 performing mutual fund over the 10-year period ended June 30, 2010.

The USAA funds are being sold to E*TRADE brokerage investors with no loads or transaction fees. They do have a 12(b)1 fee of 25 basis points and an early redemption fee of $49.99.

Eighty-three percent of USAA bond funds and 76 percent of our mutual funds beat their Lipper category average for one-year returns for the period ending June 30, 2010, the company says.

USAA Investment Management had some $43 billion in mutual fund assets and $6 billion in managed accounts as of June 30. While USAA property and casualty services are available with certain restrictions to U.S. military personnel and their family members, its financial services do not have such restrictions, a spokesperson said by phone.

USAA has 7.7 million members, and it also has distribution agreements for its mutual funds with TD Ameritrade, Vanguard and Pershing.

E*TRADE said that in August its net new brokerage assets were $0.4 billion, totaling $5.2 billion year-to-date. During the month, customer security holdings decreased three percent, or $3.2 billion, and brokerage-related cash declined by $0.5 billion to $20.7 billion, with customers as net buyers of approximately $1.0 billion in securities in August.

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