Bankers Trust has decided one of the best means of expanding its mutual fund business is through defined contribution alliances, the bundled fund offerings that financial institutions sell to retirement plan sponsors.
Bankers Trust named vice president James Norman director of sales and marketing of this channel in August in an effort to sell more funds through third party distribution channels like banks, insurance companies, trading platforms and other fund companies for defined contribution plans.
"It's a way for us to extend our reach," Norman said. He has a half dozen employees working toward this goal and more people may be added.
Bankers Trust currently has $365 billion in total assets under management but only $26 billion of that is in mutual funds. The company has always been known for its institutional money management. As a result, a significant portion of its mutual fund assets are in defined contribution plans. Norman says his focus is on marketing a handful of funds to third-party distributors to increase that defined contribution asset base. His strategy is to target the top 200 companies that create defined contribution alliances and form distribution relationships with them. Companies Bankers Trust has established relationships with include Nicholas Applegate, First Trust Corp (through its Trustlynx platform), SunGard (through its EXPEDITER system) and The Copeland Companies.
The funds that Norman is promoting are Bankers Trust's international equity fund, its S&P 500 index fund, its three asset allocation LifeCycle funds and its stable value fund. He says the Lifecycle and stable value funds have been popular among plan sponsors because they are attractive products in a volatile market.
"Those strategies become attractive in general when people become nervous," Norman said. "I think we're very well positioned."
It also helps that Bankers Trust, which has been developing mutual funds only in the past eight years, now has five year track records on most of the funds it offers, Norman says. In April, Morningstar rated the BT Investment International Equity Fund the No. 1 foreign stock fund for five years ending March 31. Morningstar has also given the fund five stars since it became eligible for rating in 1995.
Bankers Trust's other major mutual fund distribution channel is the registered investment adviser/broker dealer/wrap channel.