Chase Manhattan Corp. is crafting a major new initiative to get more banks to sell its mutual funds.

The New York banking company expects to sign an agreement by yearend to get an outside expert to boost Chase's fund sales through bank-affiliated brokers and trust departments, said Steven R. Samson, vice president and mutual fund product director for Chase's Vista Capital Management division.

He explained that Chase wanted to forge "a major kind of distribution partnership" that would supplement the bank's current relationship with mutual fund distributor Concord Financial Group, New York.

Chase also wants the partner to get banks to sell two variable annuities that Chase is rolling out.

"We are looking for entities that can take us into markets where we have low penetration," he said.

Mr. Samson said Chase was talking to several firms, which he declined to name.

If a deal is struck, it would expand what is already among the largest external mutual fund marketing efforts by banks.

Since launching its Vista mutual fund family in 1987, Chase has gotten 950 broker dealers not affiliated with the banking company to sell them. These specialists sell the majority of Chase's long-term stock and bond funds, which constitute just under half of the $5.6 billion of assets in the fund family.

Through August of this year, total sales of Chase's mutual funds were $987 million, of which $808 million went into long-term funds, according to researcher Strategic Insight, New York.

The rest of the Vista fund sales are by brokers affiliated with Chase or by trust officers. By contrast, most of the 113 other banks running their own mutual funds get most of their sales from their own brokers and trust officers.

But Mr. Samson said banking companies have been underrepresented in Chase's outside fund sales efforts.

Currently, dozens of broker-dealers affiliated with banks sell Chase's mutual funds, said John F. Balevic, executive vice president of Vista Broker Dealer Services.

This organization is a unit of Concord that assists Concord in handling mutual fund distribution activities for Chase that the Glass-Steagall Act puts off limits to banks.

Mr. Balevic added that about 15 bank trust departments also sell the Vista funds.

The biggest step Chase has taken so far this year in boosting sales through banks has been to have Concord hire Mr. Balevic, Mr. Samson said.

Mr. Balevic, who started with Concord in March, is the first Vista specialist assigned exclusively to sell funds through banks.

From his office in Chicago, Mr. Balevic brings a solid resume to the job.

Before coming to the Vista funds, he spent nearly a decade developing Chicago-based Nuveen & Co.'s fund sales through banks.

Mr. Samson predicted Chase will do well with its bank marketing effort. He said many smaller banks like the idea of selling the same mutual funds and annuities that Chase sells to its exclusive set of private banking clients.

He added that Chase's highly rated Capital Growth and Growth and Income funds should prove popular among bank customers. He also expected strong external sales of one of the new variable annuities, which is customized for wealthy trust customers. There are few products like this currently available, though experts expect them to become more popular.

Chase also expects to get marketing mileage out of a private labeling arrangement through which banks can attach their own names to Chase funds. Chase also anticipates a positive reception to a hub-and-spoke structure it has created for four of its fund portfolios.

This structure allows banks to set up their own fee structures, share classes, boards of directors, and distribution strategies for versions of Chase's mutual funds.

Experts said Chase's strategy seemed sound. But they added that the banking company faces stiff competition.

"While I think there can be some success, with so many giants in the wholesale market I think you're fighting an uphill battle," said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I.

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