In a nearly unanimous vote last week, shareholders of the 59 Wall Street Funds approved converting the funds to the hub-and-spoke structure.

Brown Brothers Harriman & Co., a private bank based in New York that serves as investment adviser to the funds, got the go-ahead it wanted to change the structure of its proprietary fund family.

The hub-and-spoke structure, developed by Signature Financial Group, enables mutual funds to manage portfolio assets as a single pool, or hub. Shares in funds, or spokes, that invest in the central pool can then be offered to different investors at different prices.

Cost Savings

Fund companies can shave their expenses by managing assets in a single pool rather that setting up separate funds for institutional, trust, and retail investors. Using the hub-and-spoke structure would allow Brown Brothers to tailor its funds to specific groups and avoid the cost of starting up separate funds.

Shareholders met at the bank's main office at 59 Wall Street, the address for which the bank's proprietary funds are named, and set the ball rolling to convert the bank's eight proprietary funds to hub-and-spoke, said Donald B. Murphy, a partner of Brown Brothers Harriman. About 99% of shareholders voted to approved the change, he said.

The matter now goes before the funks' trustees. and to regulators. Pending their approval, the bank plans to start converting some funds in December, Mr. Murphy said.

In a notice sent to shareholders Aug. 16, the board of directors recommended that the funds be converted to hub-and-spoke.

The primary reason for using the hub-and-spoke structure is to save money for shareholders, Mr. Murphy said. "We think this is a way to spread some of the fixed costs over a larger asset base." In the future, Brown Brothers "may try to attract additional spokes," or groups of investors, to invest in the funds, he said.

Possible spokes include small, regional brokerage firms. Mr. Murphy said. The Bank is already talking with firms about using this option.

Under a hub-and-spoke arrangement, companies would be able to private label funds managed by Brown Brothers. "It's a way of enabling them to do it more economically," Mr. Murphy explained.

The conversion follows similar moves last spring by J.P. Morgan & Co. and Eaton Vance Corp. However, Mr. Murphy said that Brown Brothers, which manages about $20 billion in assets, was not taking its lead from Morgan and Eaton Vance. Signature Financial, which patented the structure, is the distributor for the 59 Wall Street Funds.

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