Launching a Mutual Fund? Top Series Trust Providers to Consider

Overview

If you are considering launching a mutual fund, there are a number of factors that you have to consider. At Dakota, we have been marketing and selling mutual funds since 2006, and have raised over $25 billion in mutual fund assets so far. We have helped our clients launch mutual funds, and we have also launched a mutual fund of our own, Hardman Johnston International Growth Fund (HJIGX).

We have worked extensively with SEI and US Bank as series trust providers, As two of our clients use SEI, we use US Bank for our mutual fund; and we have three other clients who also use US Bank.

Why would you launch a mutual fund?

You launch a mutual fund because it allows you to access the trillions of dollars’ worth of assets in the RIA, Bank, Bank Trust, Independent Broker Dealer and Wirehouse Channels.

Should I create my own series trust or go into an existing series trust?

You have a choice when you are launching a mutual fund to either create your own mutual fund trust or go into a series trust. There is a huge difference in terms of time when deciding between your own trust and a series trust. This is a simple analysis but, in your own trust, you will have a lot of prep time for quarterly board meetings, and you will probably have to assign someone in your firm for those tasks. In a series trust, however, you do one annual board meeting. So, it’s very light on time.

If you feel that you are going to launch a number of funds, your own trust is ideal because it could get you better economies of scale,. But if you don’t have a fund yet, going into a series trust at one of the firms below makes the most sense. Why? It is because of time. Once you launch your fund, the series trust provider does all the administrative work, which is a lot. It allows you to focus on managing money and selling your fund. Many people assume, incorrectly, that if they have their own fund, they will have more control over the board. That is not true. The independent trustees must represent the “mutual” shareholders, not the Advisor; so, ‘‘control’’ is an illusion. In most cases, a new fund sponsor should go into a series trust.

Once you make the decision to go into a series trust, you only have to do two things: manage the fund assets and raise assets for your fund. I, strongly, encourage you to figure out your distribution strategy prior to launching your fund. Below are questions to consider in that regard:

1. Do you have an in-house salesperson? If no, are you going to hire one?
2. Are you thinking of hiring a 3rd party marketer?
3. Do you know where you plan on marketing the fund? What channels?
4. Have you sold your separate account strategy into certain channels where the allocators have said: “If you had a mutual fund, I’d invest with you.”? That is a good sign, and exactly where you should start.
5. Do you have existing relationships you can sell to?

These are all things that you need to consider during the pre-launch preparations. Mutual funds do not sell themselves, and mutual funds generally are not bought. They are, rather, sold by salespeople.

Will your series trust provider be able to help you sell your fund?

From my experience, they will not be able to. In fact, they are not very helpful, and really not designed to constitute the sales team. You must do that yourself. I have seen some series trust providers offer help, but in the end, you must do the selling. So, be prepared to sell your fund yourself.

Will platforms like Schwab, Fidelity and TD help you sell your fund to RIAs?

No. These platforms will not help you distribute your mutual fund. Your sales team must do the selling to the RIAs.

What should my mutual fund sales strategy be?

We have implemented this strategy continuously for 14 years, and it has worked very well for us. It’s simple and straight forward. Upon the launch of your fund:

1. Call on the 1,000+ RIAs/Multi-Family Offices that use outside managers (funds like yours). They have discretionary capital, and can invest in small funds.
   (Don’t have a good list of qualified RIAs? There are numerous helpful RIA databases and institutional investor databases that you can subscribe to.)
    
2. On a parallel track, start the sales cycles with the Banks, Bank Trusts and Independent Broker Dealers at the home office. There are about 75 top opportunities to start.
   (Again, if you don’t have a good list of Banks, Bank Trusts, Wirehouses home office contacts, explore different institutional investor databases that offer access to those banks and broker dealers’ contacts.)

Common sales and distribution questions:

Should I wait for my three-year track record before calling on RIAs, Banks and Broker Dealers?

No. Call on them immediately.

Do I need a minimum amount of assets before calling on RIAs, Banks and Broker Dealers?

In some cases, yes and in some cases, no. Regardless of the amount of assets you have, call on them to start the sales cycle if your strategy is attractive enough to convince them.

Time moves quickly. As such, you will have your three-year track record before you know it. What you do not want to do is wait three years then start making sales calls. Raising money has very long sales cycles, typically between 9 and 36 months. So, do not delay. Start making calls immediately upon launch.

The following are my pieces of advice for you if you are launching one fund:

• Go into a series trust at one of the firms below.
• Identify your salesperson.
• Establish your sales strategy.
• Get the institutional investor contact data you need.
• Immediately start making sales calls on the RIAs.

If you have a good investment strategy a mutual fund is an ideal product structure to access capital in the Intermediary Channels of RIAs/MFOs, Banks and BDs. So, set-up some meetings with the series trust providers below, get quote for the total costs, see what capital you might have available to seed the fund and if everything meets your budget, then start to map out your distribution plan.

If you are committed to growth and you have a sale-able investment strategy, don’t wait. Get started, launch the fund and start selling it.

Find below a list of mutual fund series trust providers.

United Missouri Bank (UMB)

UMB Fund Services is a national leader in registered and alternative investment fund services with decades of experience. Our credentialed team and robust technology platforms can help you navigate today’s asset servicing challenges.

URL: https://www.umb.com/institutional-banking/umb-fund-services

Maureen Quill
Chief Operating Officer, UMB Fund Services 
President, Investment Managers Series Trust
Maureen.Quill@umb.com 
888.844.3350.

SEI
SEI's Advisors' Inner Circle (AIC) Fund series trust provides a cost-effective, turnkey structure for mutual funds and ETF sponsors. Drawing on nearly three decades in the trust business, SEI is a flexible, well-resourced and well-aligned strategic partner and furnishes an operationally advanced, streamlined environment in which to launch, manage and grow investment products and lineups. SEI through AIC is privileged to support over $75 billion in assets spanning over 130 funds, a substantial footprint that has realized the benefits of scale through centralized, competitively priced access to the industry's leading auditors, custodian banks, transfer agents and insurance providers, guided by an established and independent board of trustees and legal counsel. By outsourcing fund administration, accounting, investor servicing, marketing and distribution, fund sponsors can focus on what they do best - managing assets, serving clients and growing distribution, while by sharing the costs of that infrastructure through our trust, they may be positioned to invest more robustly in their businesses and people. We approach the marketplace with a spirit of innovation and flexibility balanced by deep experience and a dedicated sense of best practice in helping our clients achieve their goals.

URL: https://seic.com/

George Tsiaras
610-676-2579
gtsiaras@seic.com

US Bank
As a global fund administrator with more than 50 years of experience, we leverage our expertise to strengthen your competitive advantage by developing a partnership to better understand your needs and expectations. We offer a global network that includes more than 1,400 experts. Our people, thus, become your people. We provide strategic insights, comprehensive technology solutions, best-in-class services and a level of financial strength that few in the industry can match.

URL: https://www.usbank.com/investment-services/global-fund-services.html

Mark Ellegard
Senior Vice President
(414) 477-5188
Mark.ellegard@usbank.com

Ultimus Fund Solutions
Ultimus Fund Solutions provides financial advisers and institutions an ever-expanding suite of administration and accounting services, modern investor servicing tools, and distribution support for their registered and private investment products. We partner with you to provide integrated and customizable services, manage complexity, and help you build critical financial industry connections that may allow you to expand distribution of your strategies and grow your assets. With over $220 billion in assets under administration and 750+ professionals, our strength gives us the resources to help both financial professionals and investors flourish in today’s increasingly sophisticated and dynamic investment landscape.

URL: https://www.ultimusfundsolutions.com/

Kevin Guerette
President
(617) 848-3936
kguerette@ultimusfundsolutions.com

RBB
Managers of Mutual Funds and ETFs prefer RBB’s deep resources, well-established processes and sophisticated tools. RBB is there to help firms like yours.

URL: http://rbbfund.com/

Craig A. Urciuoli, CFA
Director of Marketing and Business Development
curciuoli@rbbfund.com
(917) 597-0797

Nottingham
Nottingham has been serving the fund accounting, administration, organization, and management needs of clients nationwide for over three decades. Based in Eastern North Carolina, Nottingham delivers a full range of turnkey services, handling clients’ behind-the-scenes financial and administrative operations so they can focus on managing their portfolios.

URL: https://www.ncfunds.com/services/fund-organization/

Julie Kingrey
Director, Client Services
252-972-9922

Brown Brothers Harriman (BBH)
Brown Brothers Harriman provides a comprehensive suite of modular compliance and administrative funds services designed to support our clients’ most complex products. Our business is built on providing direct access to information and expertise, and a synchronized global servicing service model that promotes client collaboration.

URL: https://www.bbh.com/en-us/investor-services/custody-and-fund-services/fund-administration

Todd Woodacre
Vice President, Investor Services
(617) 772-6395

Northern Trust
From expanding your distribution to launching a new fund, Northern Trust provides robust fund structuring servicing, data solutions and support for traditional, alternative and tax-transparent fund vehicles and fund platforms, across all types of investment strategies, geographies and domiciles. 

URL:https://www.northerntrust.com/united-states/what-we-do/asset-servicing/fund-services/mutual-fund-services

Northern Trust does not give any contact information.

800-727-7435

State Street
With the ever-increasing focus on transparency, managing funds effectively is critical. But we know integrating systems, automating processes and consolidating data is costly and time consuming. In this light, State Street's fund administration services can help you comply with regulatory, financial and tax reporting requirements. Whatever your goals and strategies are, we can support your needs — from a traditional investment approach to complex and hybrid multi-manager and pooled fund structures.

No Contact information is available on their web site. You must fill out a form.

Link to the form: https://www.statestreet.com/solutions/by-capability/ssgs/invest-service/fund-administration.html

BNY Mellon
Combining our global experience and commitment to client service, our full suite of services and innovative solutions support a wide range of fund structures and strategies, and can help clients keep pace with the changing regulatory environment.

URL: https://www.bnymellon.com/us/en/what-we-do/investment-services/asset-servicing/fund-services.jsp

Tom Ahern — Global Head of Relationship Management

Next Steps

A mutual fund is a great way to fuel your growth and open up new channels of distribution for your investment strategies. I recommend setting up calls with multiple of the above firms and obtaining proposals. In return, they'll supply an excel spreadsheet with necessary numbers; you may also fill this in yourself to get a sense of both budget and cost to launch your fund.

Feel free to reach out to me with any questions or further clarification on the topics discussed above. I can be reached at (610) 764-0539 or gui@dakota.com.