The Emerald Mutual Funds is sidestepping the SEC's new name rule but making the best of it. Shareholders of its Emerald HomeState Pennsylvania Growth Fund today voted to change both the name and objective of the fund to accommodate the impending rule.

Historically, the fund, which has invested in smaller firms within the state of Pennsylvania, has held approximately 35 percent of its assets in other states; the SEC rule would require it to reduce that amount to 20 percent.

"We really felt we were backed into a corner and had to do this to preserve the ability to run a diversified portfolio," said president Scott L. Rehr, who also serves as executive vice president of the Emerald Advisors. "But now that we've made the change, we think it's a real opportunity."

The fund, which will emerge on July 1 as the Emerald Growth Fund, will spread its wings and look beyond Pennsylvania for broader distribution.

To that end, the firm recently hired wholesaler John Smith, who covers the New Jersey and metropolitan Philadelphia areas. Smith becomes the fourth mutual fund wholesaler for the firm and solidifies coverage over the midatlantic region. Smith, new to the fund industry, had previously worked as the managing director of an information technology firm.

Will Emerald further bolster its wholesaling force?

"We'll take it as it comes," said Rehr. "If we see the increase in interest and volume as we expect we'll add as the volume increases."

With fingers in the institutional and retail managed account sides as well, Emerald carefully balances its business. Currently, of the firm's $950 million in assets under management, $120 million is in mutual funds, $100 million in separate accounts, and the rest is institutional.

"We certainly do some strategic planning from that standpoint," said Rehr. "We would like to increase our penetration on the mutual fund side." 

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