KeyCorp is getting ready to make a big splash in mutual fund management.

Key Asset Management is planning to boost the assets of its mutual family to $50 billion within five years, from $11.5 billion now, says Richard J. Buoncore, president and chief operating officer of the unit.

The bold plan-likely involving both sales growth and acquisitions-could make Cleveland-based KeyCorp the No. 2 fund manager among banks and place it in the top 25 of all fund managers, based on current rankings. Key is now No. 18 among bank fund managers, according to Lipper Analytical Services.

"To really be a significant player in the mutual fund business in the next five years, you're going to have to have substantial assets under management," said Mr. Buoncore.

Though other fund managers also are aiming to bulk up, few have declared their goals as explicitly as Key. The most notable case has been a vow by First Union Corp. to reach $100 billion under management by 2000; the company's funds now stand at $47 billion, No. 2 among banks.

The leader among banks is Mellon Bank Corp., which has $94 billion under management in its Dreyfus Corp. and another unit.

Mr. Buoncore said that KeyCorp will have to put substantial resources behind the $50 billion plan and may have to make acquisitions.

"It can't be done the way we exist today," he said. He added that the top officers of KeyCorp are generally supportive of the plan.

"They've said, 'Show us, we're very interested,'" Mr. Buoncore said.

KeyCorp already has been boosting its investment products prowess through acquisitions. Just last week, it agreed to buy McDonald & Co., a Cleveland-based securities company that will markedly increase the sales force for Key funds and other products.

And in 1995, Key bought the New York-based asset manager Spears, Benzak, Salomon & Farrell. Mr. Buoncore and William G. Spears, chairman of Key Asset Management, both came over from Spears Benzak.

Assuming KeyCorp pursues more deals like that, the $50 billion target is not out of the question, analysts said.

"If the markets stay cooperative, I think it's realistic," said Joel Silverstein, an equity analyst at Prudential Securities, New York.

Mr. Buoncore said he is not ruling out "another acquisition or two." In acquisitions, the bank would look to fill gaps in its own Victory Fund family and McDonald & Co.'s Gradison Fund complex, he said.

Both the Gradison funds, which have $2.6 billion of assets under management, and the Victory family follow a value-and-growth strategy, leaning toward value, Mr. Buoncore said. So the bank might look at an asset manager that focuses on growth, he said.

Even with $50 billion, Key could pale next to the industry leaders. Right now, Fidelity Investments manages $427.38 billion of long-term mutual funds, according to Financial Research Corp.

Numbers like that have many fund executives eyeing growth strategies. Size can give a company "greater leverage and the ability to get more shelf space" to distribute their funds, said Geoffrey H. Bobroff, a mutual fund consultant based in East Greenwich, R.I.

But size is not everything, experts caution. "It's the quality of investment management that counts," said Neil Bathon, president of Financial Research.

In Key's case, the McDonald & Co. transaction would not swell the mutual fund assets considerably, but it would more than double the number of brokers selling the bank's funds to 700, said Mr. Buoncore.

Key is also looking to increase fund distribution through third-party broker-dealers, said Mr. Buoncore. PaineWebber Inc. sells some of the Victory portfolios, while Merrill Lynch recently began selling the entire complex, Mr. Buoncore said.

Meanwhile, the company plans to convert around $5 billion of common trust funds assets to a mutual fund structure and seek wider distribution for such retirement offerings as the Prism 401(k) product, which includes the Victory Funds.

KeyCorp is considering following the cue of fund companies by developing a strong brand identity, Mr. Buoncore said. The bank could choose one successful fund, like the $1 billion Victory Diversified fund, and market the "heck" out of it, he said.

Indeed, creating a name for your fund family is a crucial step, said Edward E. Furash, chairman of the consulting firm Furash & Co.

"The sale of a mutual fund is a merchandising business, not a track record performance business," said Mr. Furash. "As long as you have a reasonable track record of performance, then it's all sales."

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