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Woman-Run Fund to Grow Through Acquisition

The Kit Cole Strategic Growth Fund, the flagship mutual fund sponsored by Kit Cole Investment Advisory Services, a woman-owned and operated registered investment advisory company, has the urge to merge.

The San Rafael, Calif.-based firm's executives have been actively seeking another mutual fund or funds they can acquire and merge into the fledgling $5.5 million no-load fund. "One of the challenges of not being associated with a big firm is being somewhat isolated," said Kit Cole, CEO and portfolio manager of the advisory firm and fund that bear her name.

The fund debuted last November, and quickly made a name for itself as the sole mutual fund to have an all-female board of directors (See MFMN, 12/11/00.) That distinction earned the fund a place alongside other so-called "niche" funds, and sparked the interest of several large brokerage firms, who were interested in distributing the fund, said Cole

But the firm's diminutive asset size has been a stumbling block in establishing those distribution alliances, said Cole. "For a large firm, this is such a small fund to send lots of money over to."

Strategies for Growth

Cole said she is considering a variety of strategies for growing the fund, in addition to seeking a merger partner. She said she is exploring distributing the fund through various platforms such as wrap fee programs and mutual fund supermarkets.

She also said she wouldn't rule out an alliance with a larger organization and a co-branding of the fund, or she might consider aligning her large cap growth fund with other independent women money managers who manage small but complementary funds, such as a small- or mid-cap funds. "It could be a good fit for another financial institution," Cole added.

Cole's 24-year-old advisory company provides financial advice and investment services predominantly to women and families, although 40 % of its advisory clients are men.

Cole was one of the first women stockbrokers to be hired at a major brokerage firm and is also CEO of Tamalpais Bank of San Rafael, which she co-founded in 1991.

Fund Serves its Own Niche

The Kit Cole mutual fund was created to provide the firm's clients, who didn't have a portfolio large enough to warrant private account management, with a vehicle for investing.

But, the fund offers Cole's clients a novel, if not cannibalistic, incentive. Once they reach the $500,000 minimum required for private account management, clients can elect to have their fund assets shifted, in kind, from the mutual fund and into a private account.

In addition, each client that invests $50,000 in the mutual fund receives one hour of financial coaching from the firm annually, explained Maggie Wells, who joined the advisory firm as its chief operating officer this past May. Wells had been the co-founder and general manager of Women's Financial Network, the Web site that was sold to Siebert Financial of New York last year.

Despite plans to grow through an acquisition or alliance, Cole refuses to abandon the core investment philosophy that she says defines and distinguishes her woman-centric firm. That philosophy includes showing women how to invest to meet their specific financial needs.

The old belief that a woman cannot take risks and should invest conservatively and only invest in bonds is simply archaic, Cole said.