A growing mutual fund company in Memphis has picked a unit of State Street Bank and Trust to handle transfer agency duties that it previously performed for itself.
Southern Asset Management Inc. has also decided to switch its mutual fund custody accounts to State Street, from Boston Safe Deposit and Trust Co. The changes are scheduled to take effect in mid-August.
The fund company, which manages two mutual funds with combined assets of $620 million, wasn't in the market for a new custodian when it began to look for a transfer agent, according to Lee Harper, executive vice president for marketing.
Shareholders Would Benefit
But when it settled on State Street's National Financial Data Services unit as transfer agent, Southern Asset Management decided that it was in the best interest of shareholders to switch the custody account as well, Ms. Harper said.
That's because the duties of a transfer agent and a custodian arc closely related, and can be provided at lower cost and more efficiently by a single provider, Southern Asset Management said in a proxy statement that was approved by fund shareholders last month.
Transfer agents are responsible for maintaining shareholder account records, processing purchases and redemptions of shares, distributing dividends, and preparing shareholder confirmation statements and tax information. Custodians are the safekeepers of the securities in a mutual fund portfolio, responsible, among other things, for making sure trades are properly cleared and settled.
Prompted by Growth
Ms. Harper said Southern Asset Management decided to farm out its transfer agency work because its fund assets have grown rapidly in recent years.
Had the company continued the work itself, it would have had to hire one or two more people for the effort, Ms. Harper said. Also, "we would probably have had to do a pretty big upgrade to our computer system."
State Street, based in Boston is the nation's largest supplier of mutual fund custodial services.