Third-Party Distributor

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DEFINITION of '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. For mediating these transactions, third-party distributors receive a portion of the trailer fees associated with mutual fund sales for acquiring new business.

INVESTOPEDIA EXPLAINS 'Third-Party Distributor'

This arrangement works well for fund companies that don't have the necessary resources to enter new markets and instead decide to outsource to existing fund marketing companies.

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