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About The Book

Mutual Fund Industry Handbook : A Comprehensive Guide for Investment Professionals targets the needs of three audiences. First, it seeks to help mutual fund industry employees who wish to gain an understanding of both the breadth of fund operations and the context in which they are performed. Many industry members know only a limited subset of mutual fund functions - because they are new to the industry, or because their experience has been limited to a narrow functional area.

Business students studying the mutual fund industry form the second target audience. The mutual fund industry has grown in size and importance to a point where mutual fund operations are taught as a subject in both undergraduate and MBA curricula. This book serves as a text for such courses, laying out for students what fund companies do, what their management functions and issues are, and how they evolved to their present form.

Finally, this book is for the general reader, perhaps him- or herself a mutual fund investor, who seeks to understand more about the industry. Many individuals, when faced with an unfamiliar phenomenon, naturally ask the question, How does this thing work? This book is intended for those whose curiosity prompts them to ask this question about mutual funds and the U.S. open-end fund industry.

About the Author

Lee Gremillion is formerly a partner with PricewaterhouseCoopers LLP, where he led the Investment Management and Securities Operations consulting group in the Midwest. His practice focused on operations and systems within investment industry organizations such as mutual funds, insurance companies, investment managers, pension administrators, and banks. He earned a doctoral degree from the Harvard Business School, and has been a professor of Management Information Systems at Indiana University and Boston University. Prior to joining PricewaterhouseCoopers, he worked for IBM and The Colonial Group. Dr. Gremillion has been an active member of NICSA for almost ten years.

Outline of Chapters

1.    Introduction to the Industry

• Mutual Funds - Big Business by Any Standard
• Mutual Fund Defined
• Who Invests in Funds, and Why
• There's No Free Lunch, However
• The Structure of a Mutual Fund

2.    A Brief History of Mutual Funds in the United States

• In the Beginning
• The Roaring Twenties and The Crash
• The Thirties: Depression and Regulation
• The Slow-but-Steady Growth Years: 1940 to 1980
• The Modern Industry Takes Off: Explosive Growth in the 80's and 90's
• The Early Twenty-First Century

3.    Overview of Industry Structure

• The Funds
• Fund Directors
• The Management Companies
• Third Party Service Providers
• Brokers and Other Intermediaries
• The Industry Associations
• The Regulators

4.    The Mutual Fund - Product Definition

• Defining the Fund
• The Prospectus
• Categories of Funds
• Approaches to Investment Decision Making
• Implications for Operations

5.    The Investment Management Front Office

• The Investment Management Cycle
• Investment Analysis and Portfolio Management
• Trade Order Management
• The Cost of the Front Office
• Life in an Investment Management Front Office

6.The Investment Management Back Office

• Back-Office Players
• After The Trade is Made - The Settlement Process
• Portfolio Compliance and Risk Monitoring
• The Cost of the Back Office
• The Back Office at David L. Babson

7.    Fund Accounting, Audit, Legal, and Other Support Functions

• Fund Accounting
• A Day in the Life of a Fund Accountant
• Fund Audit
• Fund Legal Support
• Other Fund Administration Functions

8.    Fund Distribution: the Broker Channels

• Overview of Fund Distribution
• The Evolution of Mutual Fund Distribution
• Underwriters, Distributors, Wholesalers
• Load Fund Distribution via Brokers
• Load Schemes and Broker Compensation
• Connecting Brokers and Funds: NSCC's Fund/SERV
• Issues in Broker Distribution

9.    The Direct, Bank, and Institutional Channels

• The Direct Channel
• Distribution at American Century Investments
• The Bank Channel
• Insurance Sales of Mutual Funds
• The Institutional Channel
• The Distribution Big Picture

10.    Cross-Channel Issues: Advertising and Retirement Investing

• Mutual Fund Advertising
• Pension Investments in Mutual Funds
• Conclusions: The Role and Impact of Sales and Marketing Activities

11.    The Transfer Agent, Part 1 - Shareholder Record Keeping

• Who the Transfer Agents Are
• What Transfer Agent Service Costs
• What Transfer Agents Do
• The Daily Processing Cycle
• Transfer Agent Back-Office Technology

12.    The Transfer Agent, Part 2 - Customer Service

• How Mutual Fund Investors Receive Service
• The Mutual Fund Customer Contact Center
• Contact Center Functions
• Staffing the Contact Center
• Customer Contact Center Technology

13.    Other Service Providers

• Printing Services
• Literature Fulfillment
• Proxy Solicitation and Processing
• Unclaimed Property
• Lockbox
• Others

14.    Going Abroad: Open End Funds Outside the U.S.

• Areas of Opportunity
• Open End Funds Outside the United States
• The Opportunities and Challenges for U.S. Fund Companies

16.    Going Forward: Issues and Challenges

• The Twenty-First Century Crises
• The Mutual Fund Industrhy in the Life Cycle
• Persistent Industry Issues
• Conclusions