In 1989, Voyageur Asset Management sold less than $1 million of its funds through banks. This year, bank-related sales will range up to $200 million, executives of the Minneapolis-based mutual fund company estimate.
The increased importance of bank mutual fund sales to this conservative fund company manager is prompting the firm to boost its functions that support banks.
National sales manager Pat Wolfe said banks now account for 20% of the company's fund sales. His goal is to sell a third of Voyageur's funds through banks.
"The escalation of our bank sales has been dramatic. It's a big number and it's growing very quickly," Mr. Wolfe said.
An Easy Transition
Among the company's bank clients is First Bank System, the Minneapolis-based banking company that has a big presence in the plains states and the Rocky Mountain region.
Voyageur recently completed a large training project for First Bank System employees. Topics ranged from explaining what mutual funds are to defining investor suitability.
"Banks have grown from a nonentity in the fund business four or five years ago to a power-house both on a propriety and nonproprietary basis," he said.
Mr. Wolfe said he thinks Voyageur's funds sell well through banks because the portfolios comprise highly rated municipal and government bonds. It's an easy transition for a bank customer to make when reinvesting certificates of deposit, he said.
Mr. Wolfe said he is close to hiring a new bank development officer to establish and maintain relationships with banks nationwide. Voyageur has sales agreements with 75 banks in 10 states in which it manages and sells its state-specific municipal bond funds.
$5.5 Billion Partnership
Voyageur was founded 10 years ago by Ken Dawkins and Michael Dougherty, who act as chief investment officer and chairman, respectively. Both were from the municipal bond business and Mr. Dougherty is still active with the firm that bears their names.
Voyageur is organized as a partnership, half-owned by Minnesota Twins owner Carl Pohlad's Marquette Banks Holding Co. The other half, owned by Allied Insurance Co. in Des Moines, is being sold back to a group led by Mr. Dougherty, officials said.
Voyageur has $5.5 billion of assets in private accounts and 22 mutual funds. The funds, 18 open-ended and five closed-ended, are in Arizona, California, Colorado, Florida, Kansas, Minnesota, Missouri, New Mexico, North Dakota, Oregon, Utah, and Washington.
Eleven of the funds covering $1 billion of assets are managed by Denver-based portfolio manager Drew McCullagh.
Voyageur also manages asset/liability accounts for 17 banks in Minnesota, South Dakota, and New Mexico. Assets managed for the banks total $670 million.
Unlike some fund families, which have wholesalers dedicated exclusively to banks, Voyageur's salespeople don't specialize. But they are generally limited to one state, where other funds will have a wholesaler who covers a group of states. A wholesaler provides support for banks, financial planners, and brokerages.
"You can't provide the level of services that the banks want with one person covering a number of different states," Mr. Wolfe said.
"A higher percentage of our marketing effort is done on a one-on-one basis. If a wholesaler has half a dozen states, they just can't get around to see all their clients.
"It's more expensive for us, but we feel the higher level of service has allowed us to complete more effectively," he said.
One of the first jobs for the new bank development officer will be to design marketing materials and training programs for bank employees on such issues as cross-selling and referring customers to investment sales-peoples.
The bank development officer will travel to Oregon and Washington, where Voyageur has recently started funds, and identify bank distribution networks and meet with bank officers.
Voyageur doesn't discriminate among banks. "Anyone can sign a marketing agreement with Voyageur," Mr. Wolfe said.