E*Trade Group of Palo Alto, Calif., the online discount brokerage, has announced plans to buy Telebanc Financial Corp. of Arlington, Va., the largest online bank in the U.S. However, it is still unclear how this might affect E*Trade's mutual fund business.
E*Trade officials were unable to predict how mutual fund operations would change in the merger. Telebanc does not sell mutual funds. E*Trade sells thousands of funds, including its own S&P 500 index fund, through its fund supermarket. It plans to create and sell more of its own funds in the future.
Jim Folwell, a consultant with Cerulli Associates of Boston, said the deal should increase traffic to the E*Trade site and help bring in more assets.