By DEBORAH LOHSE
Staff Reporter of THE WALL STREET
JOURNAL
New York Life Insurance Co. is expected to announce Thursday that it is consolidating its eight retail and institutional asset-management units into a single subsidiary with $130 billion in assets under management, an effort to boost its presence in the mutual-fund industry.
The new subsidiary, New York Life Asset Management LLC, will integrate the eight major retail and institutional money-management operations of New York Life, a mutual company owned by its policyholders. While consolidating the activities in a self-standing unit could make it easier for the insurer to ultimately take the unit public, New York Life said it has no plans to join the growing ranks of those with publicly traded asset-management businesses.
The businesses being consolidated include New York Life's MainStay Management LLC, MacKay Shields LLC and Monitor Capital Advisors LLC, as well as benefits consultant New York Life Benefit Services LLC. Each will continue as a self-contained operation, New York Life said, but will be managed as a group for matters like product development and distribution.
The move represents an attempt to compete with companies like Marsh & McLennan Cos.' Putnam Investments and Axa Financial Inc.'s Alliance Capital Management, which have become powerhouses by applying their asset-management skills to a broad range of retail and institutional products.
The move comes as asset-management companies are finding that "firms with scale get top-notch service" in matters ranging from vendor relationships to access by their stock-research analysts to corporate brass, said Henry McVey, financial-services stock analyst at Morgan Stanley Dean Witter & Co. Pension consultants also require a certain scale before steering clients to asset managers. "There is some advantage to being a large, stable player," Mr. McVey said.
The change also may help New York Life better weather any stock-market declines in the future. "When the market goes up 30% a year, it hides a multitude of sins," said Gary E. Wendlandt, a New York Life executive vice president who will become the chairman and chief executive of the new unit. But when the market reverses, a lot of smaller companies will suffer from overly steep fixed expenses.
The company named Brian A. Lee, 52 years old, president and chief executive officer of MainStay Management. Previously, Mr. Lee was president and management director of Deutsche Fund Management Inc., a unit of Deutsche Bank AG.
Investors sent a net $5.64 billion into money-market funds in the week ended Tuesday, according to IBC's Money Fund Report, a newsletter.
Institutional investors accounted for the inflow, pouring a net $6.31 billion into taxable money funds in the week. Individual investors, however, took $381.1 million out of money funds. Tax-free money funds saw outflows of $287.4 million.
Money-fund yields rose across the board. Seven-day simple yields on taxable money funds rose to 5.27% from 5.23%, as did seven-day compound yields, to 5.4% from 5.37%. Thirty-day simple yields rose to 5.22% from 5.19% and 30-day compound yields increased to 5.36% from 5.32%, IBC said. Compound yields assume reinvestment of dividends.
The average maturity of the funds' investments, which include commercial paper (short-term corporate IOUs) and Treasury bills, stayed steady at 49 days.
The highest seven-day yield among taxable, general-purpose money funds was Strong Investors Money Fund at 5.89%, Olde Premium Plus Money Market Series at 5.75% was second, followed by Aon Funds/Money Market Fund at 5.74%.
The average seven-day simple yields on tax-exempt money funds climbed to 3.12% from 3.02%, while seven-day compound yields rose to 3.17% from 3.07%. Thirty-day simple yields rose to 2.91% from 2.81%, and 30-day compound yields increased to 2.95% from 2.84%.
The average maturity of tax-free money funds shortened to 39 days.
The biggest seven-day, tax-free compound yield belonged to the Strong Municipal Money Market Fund at 3.85%, followed by Zurich Yieldwise Municipal Money Market Fund at 3.82%. Invesco Treasurer's Tax Exempt Reserve at 3.77%.
IBC's Money Fund Report is published by IBC Financial Data Inc., a unit of Informa Financial Information Inc. All are part of Informa Group PLC.
Write to Deborah Lohse at deborah.lohse@wsj.com1
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