Wilmington Trust Corp. is beefing up its mutual fund administration business with a revamped platform, new clients, and new hires.
The $5.4 billion-asset Delaware bank's affiliated investment manager, Rodney Square Management Corp., is creating a new master-feeder structure for its own mutual funds and its administration clients'.
In a master-feeder arrangement, also called a hub-and-spoke structure, assets of several funds are managed by a "master" in a centralized pool. The "feeder" mutual funds can be independent and can carry different names, sales charges, or even expense ratios.
The master-feeder structure will help the bank convert its common and commingled proprietary fund assets into proprietary mutual fund assets, said Carl M. Rizzo, Wilmington's newly named vice president for administration. The bank's Rodney Square Funds now manage $1.6 billion in assets, a figure that will double after the conversion.
Rodney Square is also gearing up to administer mutual funds for two new clients. While Mr. Rizzo declined to name them, he said they are both equity firms that manage individual accounts. The two are preparing to file mutual fund registrations with the Securities and Exchange Commission. These clients, as well as existing ones, will be able to tap into the new master-feeder platform.
"What Rodney Square wants to do is expand its service business," Mr. Rizzo said. "We've been the first fully integrated service firm in the bank channel, and we want to continue to grow."
As a subsidiary of a state-chartered bank, Rodney Square can administer mutual funds because it is not expressly covered by the federal prohibitions of the Glass-Steagall Act. Mutual fund administration includes the oversight of marketing and regulatory filings.
Rodney Square services $4.5 billion as an administrator, transfer agent, or subadviser. None of its 15 outside clients, which include Kiewit Mutual Fund, the HomeState Group, the Olstein Funds, Heitman Real Estate Fund, 1838 Investment Advisors Funds, and Barnett Bank Trust Co., have more than 50,000 shareholders.
An attorney who joined Rodney Square in July, Mr. Rizzo says time spent in the private sector as a litigator and with the SEC have made him acutely aware of how fund groups must operate to remain in good standing with regulators.
" I'm here to make sure we do that for clients," he said.
Mr. Rizzo came to Rodney Square after stints with the Lutherans' fraternal benefits association in Wisconsin and USAA Investment Management Co. in San Antonio. He gained the bulk of his experience with the SEC's investment management division.
"To attract business, you have to have some strength in the regulatory and compliance area," said Burton J. Greenwald, managing director of B.J. Greenwald Associates, a mutual fund consulting firm in Philadelphia.