The Investment Manager’s Role in Mutual Fund Distribution

Your plan is in place, your team has been assembled, and your investment objectives are set. You are almost ready to launch your mutual fund. Yet, before your fund enters the marketplace, you will need a distribution plan.

One of the most important decisions facing you when creating your distribution plan is the investment manager: whether to sponsor and operate a proprietary fund trust or launch a product as a series of an existing shared trust. This decision is based on many factors, including the strength of the advisory firm’s brand name, the existing product lineup, and how the firm wants to position itself in the market.

A proprietary fund trust allows you to control all aspects of the fund, including selecting the board of directors, policies and procedures, service providers, and contract terms related to launching, marketing, and operating the trust.

In the case of a shared (or series) trust, many of these decisions are made by the series trust provider. The board of directors is in place, and you will be asked to adopt the policies and procedures of the trust and their existing service providers. With this loss of control, there is a gain in efficiency. Managers who launch funds into a shared trust are typically quicker to market, enjoy cost savings when compared to proprietary, and can rely on the expertise of certain service providers concerning the intermediary landscape.

Weighing the benefits and drawbacks of a proprietary fund trust vs. a shared or series trust and how each impacts your mutual fund is an important first step before you determine the channel of mutual fund distribution.

Launching a mutual fund?

If you are looking to launch a mutual fund, then download our guide below. Our Mutual Fund Distribution Guide will show you the two channels of mutual fund distribution and introduce you to the key players. We will explain the different types of broker-dealers that participate in this process and how they work with advisers like you to attract and maintain investors. Along the way, we will also discuss aspects of the compensation, regulation, and strategy involved in launching and operating your fund.

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How we help

If you are ready to launch a mutual fund, then contact us today to get started.

ACA Foreside distributes over $1.1 trillion (about $3,400 per person in the U.S.) of mutual fund product for over 240 fund families through our broker-dealers. We serve as the legal underwriter for registered funds (mutual funds, closed-end funds, and ETFs) and placement agent for private funds. We provide our clients with an established broker-dealer framework and ongoing education to meet the changing SEC and FINRA regulatory landscape.

Once launched, we can further support you with our broad range of advisory, managed services, and regulatory technology solutions, to help you grow and protect your business, while also addressing your compliance, ESG, investment performance, and cybersecurity challenges.