Moving to increase its mutual fund distribution, KeyCorp has signed on with three networks that target financial advisers.

Twenty funds from its Victory and KeyFunds families will be available through Schwab Institutional OneSource, Fidelity Institutional Funds Network, and DataLynx beginning in December. These networks make mutual funds available to investment advisers without charging a transaction fee.

KeyCorp projects the new distribution channels will help bring between $50 million and $100 million in new assets to its $8 billion fund complex next year.

Key is putting three funds from its no-load KeyFunds family and 17 of its 32 Victory Funds on the three financial adviser networks. The three no- load KeyFunds, which KeyCorp inherited through its 1995 acquisition of Spears, Benzak, Salomon & Farrell Inc., are already available on Schwab's Institutional One Source.

Mutual fund sales through investment advisers are growing at a rapid pace, noted W. Christopher Maxwell, executive vice president and head of Cleveland-based KeyCorp's mutual fund unit."To take advantage of that, we have to be on one of these platforms," he said.

Other banks that offer their proprietary funds through the networks include NationsBank Corp., First Union Corp., Bankers Trust New York Corp., Mellon Bank Corp., and Signet Banking Corp.

According to Cerulli Associates, a Boston-based research firm, between 15% and 20% of funds sold from direct market platforms are through some sort of intermediary, such as fee-based financial planners. These planners accounted for $52 billion of mutual fund sales during 1995, according to Cerulli's research, which was a seven-fold increase over three years.

"We are very serious about being a significant, knowledgeable, competent player in this marketplace," Mr. Maxwell said. "We will do this through a variety of positionings and product initiatives to come."

This year, third parties are expected to account for approximately $500 million worth of KeyCorp's $1.5 billion in fund sales, said John N. Drahzal, national sales manager for KeyCorp Mutual Fund Advisers. That's up from $50 million from third parties one year ago, he said.

"As big and as broad as we are, we only touch a fraction of people in our marketplace, Mr. Maxwell said. "And outside it, hardly at all."

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