Starting a Mutual Fund --- How?

[Richard O'Leary]

Does anyone have a pointer to information regarding establishing a new
mutual fund? I've been drawing blanks in some of the usual locations....

-- Dick O'Leary

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Richard O'Leary Environmental Scientist
Crawfordville, FL (904) 926-1340
rol...@freenet.fsu.edu Compuserve: 73112,3556
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--
**********************************************************
Richard O'Leary Environmental Scientist
Crawfordville, FL (904) 926-1340
rol...@freenet.fsu.edu Compuserve: 73112,3556

[Red Herring]

In article <3qd8cd$b...@freenet3.scri.fsu.edu>,
rol...@freenet2.scri.fsu.edu (Richard O'Leary) wrote:
->Does anyone have a pointer to information regarding establishing a new
->mutual fund? I've been drawing blanks in some of the usual locations....

Barron's had an article on the subject several months ago. From what I
remember, one could start a new MF with as little as $30,000.

[FUNDSIV]

Your first stop should be to hire a law firm that specializes in writing
the prospectuses for mutual funds. I have been involved in the
establishment of 2 mutual fund families (American Performance Funds and
FUNDS IV) and can tell you that to get a mutual fund throught the
registration process is no easy task.

I believe the seed money required for a new family is $100k. This seed
money must stay in the mutual fund for a set amount of time, which I
believe is 5 years.

Most players in the industry would not think of starting a mutual funds
without at least $25 million of investable cash. This level keeps the
fixed expenses like laccounting and auditing to a minimum. You will also
need to find a board of directors, and a custodian for the securities.
The custodian will need to be prepared to undergo several suprise security
counts each year by the fund auditors.

Hope this has helped.

Scott A. MacDonald

[ragsdale]

A few more of the requirement for starting a mutual fund:

1. Locate 3 outsiders as board members (+2 insiders).
2. Locate and retain a custodian (usually bank) for fund assets
3. Locate and retain a fund accounting firm to do daily computation
of net asset value.
4. Locate and retain a fund service company to do shareholder accounting
5. Retain a fund auditor to prepare quarterly and annual reports.
6. Become or retain an SEC registered investment advisor. This usually
is the management firm that operates ("owns") the fund. Legally,
the investors own the fund and they retain the advisory. In
practice, the advisor/management firms is in control.
7. Begin the registration process with the SEC *and* every state
in which you intent to offer the fund shares. This means you
have to do almost 51 registrations. There are a few states
with no such Blue Sky registration requirement, but they are
low population. These state Blue Sky registrations are the
largest effort for a small fund. You probably won't register
in all states until assests pass $30 million.