RealTime IT News

E*TRADE Forms Asset Management Unit, Plans Index Fund

E*TRADE Group Inc. Tuesday announced plans to offer its own family of mutual funds and money market offerings.

The deal comes just after E*TRADE gained approval from the Securities & Exchange Commission and the National Association of Securities Dealers to enter the asset management business.

E*TRADE will launch the E*TRADE S&P 500 Index Fund next week and also plans to offer more index funds over the next 12 to 18 months. Customers will be able to invest in the funds through E*TRADE's mutual fund center.

The new funds will be offered by E*TRADE Asset Management, an E*TRADE subsidiary.

"Adding asset management to our portfolio of businesses is another step in E*TRADE's strategy to diversify its revenue stream by leveraging its electronic business model and its growing base of online investors. At the same time, it allows us to develop new investment offerings that address the needs of existing and prospective customers," said Kathy Levinson, E*TRADE's president and chief operating officer.

While the online brokerage continues to add customers, it has also faced a barrage of complaints from users who say they have frequently been unable to access the system. Those complaints prompted New York Attorney General Eliot Spitzer to launch an inquiry into whether false claims and delays have caused investors to lose money.