Sub-advising mutual funds is becoming another form of distribution for firms that can maintain solid investment performance but have limited ability to sell retail funds broadly, a new study suggests.

Mutual fund companies continued to increase their use of sub-advisers in 1999, according to Financial Research Corp. of Boston, a financial services tracking and consulting firm. The number of funds that use sub-advisers and those funds' assets under management increased for the eighth consecutive year in 1999, FRC said. Sub-advised funds accounted for nearly $33 billion in net sales of long-term funds in 1999, or 9.8 percent of total industry sales, FRC reported.

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