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Rating:Waddell & Reed Expands Distribution Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, June 26, 2000

Waddell & Reed Expands Distribution

Reported by Sean Hanna, Editor in Chief

Waddell & Reed (Overland Park, Kansas) is targeting new third-party channels for the distribution of its funds. The new channels -- institutional supermarkets, 401(k) retirement plans, and wrap programs -- were chosen because they do not conflict with the fund company's current distribution through its own advisors. W&R expects to begin selling through the new channels in the fourth quarter.

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"We're taking a very strong investment capability and leveraging it into different channels than our existing channels," Thomas W. Butch, executive vice president and chief marketing officer of Waddell & Reed, Inc. told the MFWire.com. "The key thing is to do it in a way that doesn't conflict with existing channels."

"The funds are not now in any of the supermarkets," said Butch. He added that the firm would consider the institutional arm of the major supermarkets (Schwab, Fidelity, Waterhouse, and DataLynx) but that it currently has no agreements finalized.

On the retirement side of the equation the fund company is looking at partnerships with third-party administrators, broker-dealers, recordkeepers, and consultants to distribute its funds to the 401(k) market.

The fund company is still building its sales force for the new channels, according to Butch. He reports that they are "well along in the process" of looking for people. They are seeking a national sales manager and channel heads for the 401(k) channel and the wrap program channel. The channel heads will report to the national sales manager who will in turn report to Butch.

Mike Stilwell was recently hired to act as the channel head for the institutional channel. He was most recently at Conseco and will handle the firm's relations with RIAs.

Under its plan, Waddell & Reed will rename the United Group of Mutual Funds to "Waddell & Reed Advisors Funds" and the Waddell & Reed fund family will be renamed "W&R Funds,". The Waddell & Reed Advisors Funds will continue to be available for sale only by Waddell & Reed's proprietary sales force, comprising about 2,600 financial advisors. The name changes and fund additions are expected to be effective on or around July 1, 2000.

W&R Funds will be available for sale both by Waddell & Reed advisors and selected third parties. To support third-party channels the company is adding Class A and Class B shares to the funds which already feature Class C and Class Y shares. Butch said that the load structure of the new share classes is typical of the industry and that the front-end loads can be waived in some situations.

In addition, four new funds will be added to the W&R Funds lineup: W&R Large Cap Growth Fund; W&R Mid Cap Growth Fund; W&R Tax-Managed Equity Fund; and W&R Money Market Fund.* These funds are expected to generally replicate the investment strategies of the current United Vanguard Fund, United New Concepts Fund and United Tax-Managed Equity Fund, respectively. Finally, the Waddell & Reed Growth Fund will be renamed the "W&R Small Cap Growth Fund."  

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