Bankers Trust New York Corp.'s mutual fund subadvisory business is booming, chairman Frank N. Newman said last week.
In 1997 the banking company was the fastest-growing institutional money manager in the United States, largely because it became subadviser to a number of large mutual fund companies, Mr. Newman told a gathering of bank and financial analysts Thursday night.
Though mutual fund companies typically serve as investment advisers to their own funds, they frequently turn to specialized money managers for advice in areas where they lack expertise.
For instance, Fidelity Investments, the nation's largest mutual fund company, recently picked Bankers Trust to subadvise a family of index funds. Fidelity is known for savvy stock-picking, while Bankers Trust is known for index funds-passively managed portfolios structured to track the performance of market measures such as the Standard & Poor's index of 500 stocks.
Bankers Trust has $250 billion of assets under management, including $165 billion in index funds, Mr. Newman said. Only about $21 billion of its fund assets are marketed under the Bankers Trust label, according to data from Lipper Analytical Services, Summit, N.J.
Other companies that recently began using Bankers Trust to subadvise index funds include Equitable, Scudder Stevens & Clark, and USAA. In addition, SunAmerica Inc. recently tapped Bankers Trust to subadvise its international equity funds, another area of expertise for the nation's seventh-largest bank.
Mr. Newman told the analysts that the bank's focus on index funds reflects its decision "not to try to be all things to all people." For instance, he noted, Bankers Trust has decided it does not want to be in the mass-market mutual fund business, so last year it sold the back-office components of its 401(k) plan business to Metropolitan Life Insurance Co.