Regions Financial is leaving the mutual fund management business. The Birmingham, Alabama-based owner of Morgan Keegan inked a deal with Pioneer Investment Management under which 11 RMK Select Funds -- which collectively hold $2 billion of assets -- will be reorganized into Pioneer funds. Financial terms of the deal, seen to close in the second quarter pending fund shareholder approval, were not made public.

"Retail mutual fund management is a very specialized business. It is not our core expertise," Regions spokesman Tim Deighton told The MFWire.

Morgan Asset Management employees who manage the 11 funds will focus on managing private assets when the deal closes, Deighton said.

Last year, Regions moved management of a group of bond funds to Hyperion Asset Management (see The MFWire, 04/22/08).

In a news release on Thursday, Regions CEO Dowd Ritter said the Pioneer deal will "allow us to continue to meet our clients’ investment needs while offering them the breadth of options Pioneer brings to the table," noting that Morgan Keegan's team "excels at managing our clients' assets, municipal underwriting, and investment banking."

Regions executives said they chose Pioneer out of several interested parties, citing its investment performance record, competitive fund expenses and depth of investment options.

Perhaps Pioneer's deal history was a factor, too. Back in 2005, Pioneer acquired AmSouth's mutual fund business (see The MFWire, 09/26/05). AmSouth itself was purchased by Regions in 2006.

In press release on Thursday, Pioneer CEO Daniel Kingsbury said the Regions deal "is expected to benefit both RMK Select Funds’ shareholders and Pioneer Funds' shareholders by creating the potential for reduced expenses through economies of scale."

Pioneer manages 47 mutual funds in the U.S. with combined AUM of $50 billion as of end-December. 

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