UMB Financial Corp. moved its proprietary mutual funds into the modern age last week when it became legal manager of the 14-year-old fund family.

The bank replaced Jones & Babson, a Kansas City, Mo., firm which specializes in statutory management and underwriting, after fund shareholders approved the change last year.

The move promises to strengthen the bank's control of the Scout Funds and yield a greater slice of the fee income they generate, bank executives said.

"We're all searching for what we do best and what we can make a profit at," said David Anderson, executive vice president for UMB Investment Advisers, which manages the fund assets.

The bank decided outsourcing statutory fund management was no longer necessary. "We're not large enough where we think we can do everything or so small that we delegate it all out," he explained.

UMB Bank, a pioneer in the proprietary mutual fund business, launched a trio of money market portfolios, a stock fund, and a bond fund in 1982. The Scout Funds, which are sold without loads, command nearly $1 billion in assets.

The bank delegated the statutory fund manager role to Jones & Babson in the face of early regulatory uncertainty over how directly a bank could control mutual funds.

Even after the recent change, Jones & Babson will continue to serve as distributor and transfer agent, and will perform most administrative functions for the fund family.

Jones & Babson president Larry D. Armel downplayed the move's impact on his business: "Changing the statutory manager is a solemn legal and regulatory occasion, but the practical effect is not too significant."

But in the wake of the legal change, the bank is also considering revamping the way it markets the no-load funds, executives said.

"We feel that being statutory manager opens up other distribution channels," said E. Frank Ware, executive vice president at UMB Bank.

The bank is even considering employing additional distributors with experience in the bank channel to boost sales, Mr. Ware said.

Retail sales contribute less than a quarter of the bank's fund sales, according to Mr. Anderson. The no-load funds offer little financial incentive for bank brokers to sell the funds, he acknowledged.

The bank's long tradition of selling its mutual funds without sales loads might be open to change.

"One of the things we have to consider is whether we want to have load funds," said Mr. Ware.

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