First Data Investor Services Group has climbed a rung on the ladder of top administrators of bank-managed mutual funds.
The Westborough, Mass., company's fund administration business jumped 17.9% in the second quarter, nudging it into fifth place, according to Lipper Analytical Services Inc., Summit, N.J.
The increase included $2.97 billion of new business from ABN Amro, Chicago, that boosted First Data's assets under administration to $54.6 billion.
"Our bank initiatives have been very strong and continue to be," said Barbara Worthen, executive vice president of First Data Investor Services. "It's very definitely a channel we know we can serve."
Banks use administrators to handle routine but essential chores such as fund accounting, record keeping, and daily calculations of net asset value for their funds. At June 30, 106 banks were managing mutual funds, and most of them used one of 15 administrators, according to Lipper.
Though the companies on Lipper's top 15 list were the same as for the previous quarter, aggregated assets under administration increased 6.8%, to $605.3 billion.
"The third-party provider business reflects what's happening in the overall bank mutual fund industry, which is growth of assets-a lot of that market-driven-and then consolidation," said Joy P. Montgomery, president of Money Marketing Initiative, a mutual fund consulting firm in Basking Ridge, N.J.
Most companies maintained their rankings, and the top five had the most growth. Bisys Fund Services-the No. 1 administrator for several quarters- held on to that spot and increased its assets under administration 6.8%, to $156.2 billion.
Part of the company's growth reflects a "very strong market," said David Huber, president of Bisys Fund Services, the mutual fund servicing division of Bisys Group Inc., Little Falls, N.J.
The second-ranking company, SEI Investments of Oaks, Pa., increased its assets under administration by 10.8%, to $87 billion.
Assets under administration at the No. 3 company, PFPC Inc. of Wilmington, Del., increased 4%, to $69.6 billion. Stephens Inc. of Little Rock, Ark., was ranked fourth by Lipper, with $68.2 billion under administration, 11.3% more than in the first quarter. First Data pushed Federated Services, Pittsburgh, with its $47.2 billion of assets under administration, down to sixth place.
Meanwhile, a handful of administrators gained clients.
First Data, for example, benefited from ABN Amro's severed relationship with SEI Investments. SEI ended the relationship because the banking company wanted the option of giving short notice if it declined to renew the contract, said Richard B. Lieb, president of SEI's investment systems and services division.
SEI gained a client in the second quarter. National City Bank, Cleveland, which previously used PFPC, "wanted a bundled provider that could distribute and administer the funds," a bank spokesman said.
Executives at the top 15 companies said they expect to continue adding bank clients. "The banking mutual fund industry, while it's mature in terms of number of participants, is in its infancy in terms of the realization of its distribution opportunity," said Bisys' Mr. Huber.
