Third-Party Distributor

Third-Party Distributor

The name given to institutions that sell or distribute mutual funds to investors for fund management companies without direct relation to the fund itself.

Notes:

Essentially a middleman, third-party distributors receive a portion of the trailer fees associated with mutual fund sales for acquiring new business. This arrangement works well for fund companies that don't have the necessary resources to enter new markets, deciding instead to outsource to existing companies.

See also: Fund Manager, Mutual Fund, Portfolio