First American Corp. has launched a line of private label mutual funds by tapping a unique program run by Concord Holding Corp., New York.
The $7.3 billion-asset banking company, Tennessee's second largest, used Concord's Infinity Mutual Funds structure to create its ValueStar Family of Funds.
The ValueStar family, which is being offered to retail and corporate customers, consists of four portfolios with $235 million of assets.
The portfolios are two money market funds, a short-intermediate bond fund, and a Tennessee tax-exempt bond fund.
The Infinity structure, established in 1991, provides a "quick, low-cost entry" into the mutual fund business, said Joseph F. Kissel, executive vice president at Concord.
This is because Infinity is an existing fund complex, already registered with regulators.
Some Expenses Shared
New funds can be started under its umbrella with minimal paperwork. Several fund managers operate under a single structure, enabling them to share certain expenses.
The arrangement calls for Concord to handle fund administration, and for banks to manage fund investments.
This differs from so-called hub-and-spoke arrangements, where banks attach their own name to a fund run by a single fund manager.
Concord says its Infinity structure can let fund managers launch funds in less than 60 days.
By contrast, it can take four months to get regulatory approval to launch new funds in the traditional manner.
Called Cost Effective
At least three other firms now use the Infinity structure, including Bank of New York Co.
It appears to be a cost effective approach that more banks may use, said Glen Casey, a consultant with Cerulli Associates, a consulting firm in Boston.
The banking company plans to market the funds to retail investors through its Ameristar Capital Markets brokerage unit.
