Philadelphia mutual funds find a ready market at home

If you don't count the regional banks with their billions of assets in trusts , the largest money managers in the Philadelphia area are two vast mutual fund complexes: Delaware Management Company and the Vanguard Group.

Delaware Management has been serving individual investors since 1937, when its first equity fund was born. Since then, it has opened seven more funds, becoming, in the process, ''one of the major factors on the Delaware Valley investment scene,'' as its president, John Durham, puts it.

A look at the growth curve confirms Mr. Durham's boast. In 1960 Delaware Management had $80 million of its shareholder's money in two mutual funds; today it manages more than $6 billion.

Of the current total, more than $2 billion is invested in the Delaware Cash Reserve. This money market product has caught the fancy of thousands of households in the area as a result of the company's imaginative use of television advertising. Delaware, in fact, capitalizes on its proximity to shareholders in its marketing pitch. Says Mr. Durham: ''People seem to be most comfortable with a hometown product. It's a definite selling point.''

Indeed, Delaware has concentrated its ad campaigns on the Philadelphia area to such a degree that most of its 230,000 individual shareholders are from that region. But it has not, Mr. Durham insists, limited its geographical sights. On the contrary, Delaware regularly ''takes the pulse'' of other parts of the country, he says. And wherever there is a groundswell of interest in its funds, Delaware boosts its advertising budget.

For its more complex equity- and fixed-income (bond) load funds, Delaware uses national brokerage firms as its marketing vehicle. But even that heavy reliance on brokers is shifting somewhat, as Delaware is beginning to put more emphasis in its ads on its 800 toll-free telephone number, which investors may call to buy shares in either the load or no-load funds. A load fund charges a sales commission; a no-load fund does not.

Not only are an increasing number of sales being made on the 800 line, but people who already own shares are calling frequently with questions, which the Delaware employee at the other end can answer instantly by calling up information on a desktop computer terminal.

In Mr. Durham's view, investing in the latest technology to service clients gives mutual funds like Delaware an edge over older banking institutions, particularly savings-and-loan associations, whose troubled financial affairs have left them unable to keep up with the changing times.

Vanguard, with headquarters in rural Valley Forge, is another success story, judging by its $4 billion in assets. But it has pursued a different tack from Delaware Management Company. It has three times the number of funds Delaware has and puts a much greater emphasis on institutional accounts. With roots in the old-line Wellington Management Fund dating back to 1928, Vanguard has since undergone a complicated series of mergers, government-mandated divestitures, and name changes.

Today there are 21 no-load mutual fund portfolios under the Vanguard aegis, though some are packaged as a group under one prospectus. Wellington Management Company, a private partnership, is the investment adviser for most of the funds. But Vanguard -- which acts as distributor and administrator for all of them -- itself manages one equity fund and the money market funds.

The best-known fund of the lot, the Windsor Fund, has been managed for the past 18 years by investment wizard John Neff, a partner of Wellington Management and an oft-quoted figure in the financial press. Mr. Neff has nurtured Windsor from $75 million to $900 million in assets -- and at present it has nearly one-fourth of Vanguard's total assets. His achievement is all the more unusual in light of the persistent public disaffection with mutual funds, which has stunted sales -- except for money market funds -- for the past several years.

Vanguard's aggressive pursuit of the institutional market has paid off handsomely. Though only 10,000 of its 410,000 shareholders are institutions, their assets represent 35 percent, or $1.4 billion, of the total fund assets, up from 26 percent in 1975, according to Vanguard chief executive officer John Bogle.

Mr. Bogle predicts the institutional trickle into mutual funds will grow, as pension funds perceive that, ''in general, the funds have a better performance record than banks and investment counselors and insurance companies.'' But to date only 5 percent of the $350 billion in corporate pension assets are put into mutual funds, he estimates. That may be because pension officers have, he admits , ''a healthy skepticism'' of the future of funds, given their low popularity recently. Nonetheless, Mr. Bogle contends , ''on a performance basis alone, they should be the preferred investment today.''