U.S. Trust Corp. is reaching out for mutual fund assets - and getting them.
A combination of sales through the bank and, increasingly, through outside channels, is fueling vigorous growth in U.S. Trust's Excelsior family of mutual funds.
During the year ended Aug. 1, U.S. Trust saw assets in its proprietary funds rise nearly 34% to $4.7 billion. Since Jan. 1, the complex has seen net asset inflows of almost $500 million, said Avi Nachmany, principal at Strategic Insight, a New York consulting firm.
"The fact that their business is growing rapidly is a very good sign," Mr. Nachmany said.
The boost in assets has enabled U.S. Trust's profitable fund complex to add even more to the company's bottom line.
"We run a lean and economical fund program," said Kenneth G. Walsh, executive vice president in charge of mutual funds at the New York-based bank. "We can make money at $3 or 4 billion but even more at $7 billion."
U.S. Trust seems on track to hit that mark soon.
Pending legislation on common trust conversion will help the mutual fund complex. As soon as President Clinton follows through on his promise to sign the minimum-wage bill, the assets of Excelsior funds stand to increase by almost 40%.
"We've got $2 billion sitting in the wings," Mr. Walsh said.
Long a powerhouse in money management and private banking, U.S. Trust is also looking beyond its traditional customers to pump up its family of 35 funds.
One recent initiative involves selling through small to midsize banks eager for an array of mutual funds but unwilling to partner with a traditional supplier.
"We have found ... that some institutions feel threatened by big players like Fidelity or Federated, who they think could steal their customer," Mr. Walsh said. "They know we're not going to do that."
In March, $678 million-asset Hudson Valley National Bank, based in Yonkers, N.Y., began offering U.S. Trust funds through its trust department. Though new, the relationship has contributed several million in new mutual fund assets, Mr. Walsh said.
He added that three or four similar deals with other banks are in the works.
An earlier push that's paying off, Mr. Walsh said, is selling through regional brokerages. With about 140 selling agreements in place and a team of five wholesalers hired over the last year to help support them, sales through regional brokerages have contributed more than $40 million in assets since Jan. 1, Mr. Walsh said.
The bank would also like to distribute its funds nationwide through selling agreements with one or more national brokerage firms.
Sales through 401(k) plans, another key initiative, are starting to kick in. U.S. Trust has already booked nearly $140 million in fund assets garnered through 401(k) plans this year, Mr. Walsh said.
Last week, U.S. Trust renewed its contract with Federated Services Co. to serve as distributor and co-administrator for its bank fund family. Federated now includes U.S. Trust's funds in its LifeTrack 401(k) and TrustConnect clearing system.
"We saw an avenue to get some new assets without doing a lot of work by being involved with Federated," Mr. Walsh said.
