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Rating:FundResource Enters the TA Biz Not Rated 3.0 Email Routing List Email & Route  Print Print
Friday, November 17, 2000

FundResource Enters the TA Biz

Reported by Tamiko Toland

Quantitative Advisors is making an unexpected change to its business model. FundResource, its nascent subsidiary, is presently negotiating with eight to ten companies to provide transfer agency service.

While Quant has done its own transfer agency for fifteen years, this is the company's first foray into the competitive world of outsourcing.

"At $5 or 10 billion and up, standard TAs are great," admitted Quant's president, Fred Marius. "We're not really competing because they don't really want the business of the smaller companies. They see it as cutting too far into their margin."

With only six funds and $230 million under management, Marius felt it was uneconomical for Quant to enlist the services of existing transfer agents. Fund companies started coming to him, he said, because they were looking for a more economical option. Smaller mutual funds pay disproportionately high fees, sometimes fifty basis points, because of fee minimums, Marius contends.

Marius dismissed critics who doubt FundResource's ability to undercut other firms' competitive fees. "The people that are only paying eleven basis points for services are those that have $100 billion under management," he said.

The firm aims at small complexes, defined as those with under $1 billion in assets, and will assess a flat, all-inclusive basis-point fee. After the scheduled start-up in the second quarter of next year, FundResource expects to pick up one new client a month.

The question remains: What's a fund company doing getting into the TA business? There are ancillary benefits. "Bringing on other products bring on other opportunities," said Heather Dondis, Quant's marketing director, enigmatically hinting at the company's openness. Furthermore, since Quant is a sub-advised complex, Marius mentioned, the technology business does not provide a distraction from the core business.  

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