SO MUCH MONEY TO MAKE, SO LITTLE TIME: FUNDS DISTRIBUTOR SEES MANY WORLDS TO CONQUER

The folks at Funds Distributor Inc. are working off a long “to do” list.

When executives from the Boston-based mutual fund sales and marketing company emerged from their annual strategic planning session last fall, they carried with them a list of more than 30 ideas for business expansion.

High up is starting — or buying — a public relations firm, a service Funds Distributor now outsources for clients that need it. Funds Distributor, which has been hired by groups including Montgomery Asset Management and Brinson Funds to distribute more than 430 mutual funds in the United States, is also considering ways to tackle international markets.

“We should be able to take a lot of what we’ve done here and replicate it in other places,” says Betsy Connolly, president and chief executive of Funds Distributor, which is owned in part by William Nutt, the co-founder and chief executive of Affiliated Managers Group Inc. (InvestmentNews, Feb. 15).

The firm’s aspirations are being stoked by its accomplishments. In the past year, Funds Distributor — which competes with outfits like Bisys Group Inc. of Little Falls, N.J., and Atlanta-based First Data Corp. — has increased its staff by 75% to 140, opened its first office on the West Coast and launched a new division. It has also landed several key accounts, including Dresdner RCM Global Investors LLC, the German bank’s U.S. investment arm, which runs $1.7 billion in mutual funds.

“They know a lot about branding and positioning, things that other fund distributors haven’t gotten into as much,” says Pam Wilson, a mutual fund lawyer at Boston’s Hale & Dorr. “They behave a lot more like sales people.”

Still, while Funds Distributor’s in-house advertising and telephone service groups may find a ready audience abroad, the climate for getting mutual funds into the hands of non-U.S. investors may be less hospitable.

no place like home

For years, mutual fund giants like Fidelity Investments and Putnam Investments have been trying — with mixed results — to penetrate markets outside the United States. Part of the problem is that they are not household names overseas. They are also daunted by the fact that non-U.S. investors typically look to banks when buying funds, as opposed to buying them through advisers or directly.

“It’s going to be a big challenge,” Ms. Connolly concedes. “But we have experience in dealing with banks here.”

Then there’s the not-so-little matter of costs. “We know we can’t do it on a shoestring,” says Ms. Connolly, who has her eyes on Canada, Europe and Asia. “We’re in the process of trying to figure that out — what that investment would be.”

Bigger day by day

Budget or no budget, Funds Distributor is intent on getting bigger. The privately held firm’s revenues nearly doubled last year in addition to increasing the size of its staff. The company, with offices in Boston and New York City, recently opened one in San Francisco and is considering plans to expand into Atlanta, Chicago and Houston.

Funds Distributor also has launched a division catering to companies that need help in meeting the Securities and Exchange Commission’s new guidelines for simplified fund prospectuses. The new division is called ProspectusWorks.

“It’s really more of a relationship sale,” says Ms. Connolly. “We’re hoping they might hire us to do their prospectus work and get to know the folks in our advertising group.”