A terrible year for financial stocks isn't keeping Ameriprise Financial Inc. from growing. The Minneapolis-based financial planning and insurance company announced Monday that it will acquire the asset management firm J&W Seligman & Co. Inc. for $440 million.

Seligman, based in New York, manages an $18 billion portfolio of mutual funds, closed-end funds, hedge funds and institutional accounts.

Ameriprise financed the deal with cash on hand; it had $3.8 billion in cash as of December. The transaction is expected to close in the fourth quarter and will add to earnings and return on equity in 2009, Ameriprise said.

Seligman, a private company founded in 1864, is known as a pioneer in growth mutual funds as well as single-state municipal bond funds.

The acquisition will increase Ameriprise's alternative investment operations by about $3 billion. Ted Truscott, chief investment officer at Ameriprise, said that the hedge fund business was an especially attractive part of the deal.

"The trend in retail investing and institutional investing is what's known as the separation of 'alpha' and 'beta.' The search for alpha, or excess return, is a very important search in the investment world," Truscott said.

Currently, Ameriprise's hedge fund operations have been dominated by $2 billion managed by its London-based international team Threadneedle Asset Management and a small, struggling portfolio managed by RiverSource.

Ameriprise plans to keep the Seligman brand name, although how overlapping funds will be handled hasn't been finalized. Truscott said it's hard to say whether the deal will mean more jobs in Minnesota, but no jobs will be lost in the state. Seligman has about 300 employees.

The deal also gives Ameriprise a presence in Palo Alto, Calif., where Seligman's technology investment team is based, as well as another office in New York.

Seligman's experience selling its funds through wholesalers could help Ameriprise with its fledgling business to distribute its RiverSource and Threadneedle brands outside of Ameriprise's network of advisers. The deal will increase wholesalers from 22 to 36.

Truscott mentioned that the acquisition also will help broaden its institutional offerings and provide strength in growth investing -- an area of weakness for Ameriprise's funds.

Ameriprise shares closed down 48 cents at $39.40 in Monday trading.

Kara McGuire • 612-673-7293