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Vestek Joins Ranks of Fund Analyzers

Vestek, an investment research company of San Francisco, is trying to convince mutual funds that they can build their distribution with innovative research to give their brokers.

Since last fall, when it started selling its new Vestek Select fund research product, the company has signed on 80 mutual fund clients representing 55 percent of all U.S. mutual fund assets. Two of its newest clients are Scudder Kemper Investments of Boston and Warburg Pincus Assets Management of New York.

Vestek is joining an increasingly competitive market segment, one trying to capitalize on the growing use of advice by investors.

The market is already crowded with companies like Morningstar, Standard & Poors and Value Line. And competition is tough as fund companies try to give intermediaries as much assistance as possible. Brokers use products like Vestek Select, which provide data such as forecasted earnings, price-to-book and price-to-earnings ratios of mutual fund holdings, to help them sell funds to their clients.

"As distributors evolve toward a more advisory role, they're demanding more detailed information from fund companies," said Keith Webster, managing director of Vestek.

Vestek, which has long been involved in developing technology for indexing, markets its research as institutional and "holdings-based" to differentiate itself from other fund rating systems. Vestek marketing materials state that the funds are analyzed on "over 100 characteristics."

In one of its marketing pamphlets targeted at mutual fund companies, Vestek claims, "Vestek takes distribution beyond the stars,'" clearly a swipe at Morningstar.

Vestek is not the only company with a new product on the shelf. Standard & Poors of New York recently created a new mutual fund division that will help support S&P's new Select Fund Evaluation Service, which was created in March and provides intermediaries with in-depth fund analysis. Meanwhile, Morningstar is planning to introduce a rating system for the strength of mutual fund companies. (See related story, this page.)