In a move to increase fee income, United Missouri Bank has taken over the portfolio management of its three proprietary money market funds.

In doing so, the bank terminated a decade-long arrangement with David L. Babson Inc., a Cambridge, Mass., investment advisory firm.

As of May 1, UMB began to manage the three funds, which total $552 million in assets. The bank already advises its family of stock and bond mutual funds.

By taking the management of the money market funds in-house, the bank will receive an additional 10 basis points in management fees.

UMB has also renamed the money funds - which used to carry the bank's name - the Scout Funds. The funds come in three flavors: tax-free, federal, and commercial paper.

The name change was made in response to regulators' concerns that the funds not be too closely identified with the bank. The three funds ranked in the top third of their peer groups in 1994, according to Lipper Analytical Services.

The bank originally hired David L. Babson to manage the funds in the early 1980s as a way of getting around Glass-Steagall Act restrictions on bank management of funds.

Since then,"the world has changed," and banks across the country began realizing it wasn't necessary to farm out their fund portfolio management, said David Anderson, executive vice president in charge of investment at UMB.

"We realized it wasn't necessary to have a relationship with David L. Babson anymore," he said.

UMB also trimmed some of the other types of fund-related services provided by another firm with former ties to David L. Babson. Since the early 1980s, Jones & Babson, a Kansas City firm specializing in statutory management and underwriting, has handled other administrative functions for UMB's money market funds.

But UMB has begun to take some of those back-room functions in-house. Until last year, David L. Babson was a substantial minority shareholder in Jones & Babson.

UMB had been negotiating to change its relationships with both firms for several years. "This makes it real clear" who is running the funds, Mr. Anderson said.

Ms. Iida is a freelance writer based in San Francisco.

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