Despite recent dips in the stock market, the mutual fund industry executives who gathered in Washington for the Investment Company Institute's annual conference last week were bullish on the business.
The fund industry now has a high-profile role in the nation's financial life, said Matthew P. Fink, president of the Washington-based trade group.
One out of four U.S. households owns mutual funds today, added Ronald P. Lynch, the ICI's chairman and managing partner of Lord, Abbett & Co., New York.
And many in the industry are confident that there is room to grow.
Direct Competitor
Edward D. Jones & Co., a brokerage firm that goes toe to toe with banks in 3,000 communities, has a simple ambition: "Our goal is to be everywhere," said Thomas W. Miltenberger, a principal at the St. Louis-based firm.
"We have always looked at banks as our competitors," Mr. Miltenberger said. Indeed, nine out of 10 Jones branches are right across the street from a bank, he said.
Our goal is to get more [customers] to walk our way than to walk their way," he said.
Demographically, banks have some advantages over mutual fund companies and brokerage firms as baby boomers enter the investing cycle of life, said James F. Getz, president of the broker/dealer division at Federated Services Corp.
"Those baby boomen are all clients of the banks, and it's up to the banks to lose them," he said.
Banks certainly have room for improvement when it comes to selling mutual funds, said Elie M. Genadry, president of the institutional services division at Dreyfus Service Corp.
"Banks are so worried about compliance that they are being "too cautious," he said.
Many banks won't sell mutual funds that lack a three- or four year track record, Mr. Genadry said. And they are too concerned about ratings from services such as Morningtar.
"If a :fund drops from a fourstar to a three-star rating, they would drop it," he said.
Inevitably, Mr. Genadry was asked to field some questions about Dreyfus' approaching acquisition by Mellon Bank.
"I didn't know we were going to be owned by a bank," he said in mock astonishment.
"There's always 10% that don't get the word," retorted David C. Conine, director of mutual fund marketing at Merrill Lynch.
Speaking to conference-goers on the eve of a key announcement, Securities and Exchange Commission Chairman Arthur Levitt Jr. provided fund executives with a preview of a program to raise the standards of practice among broken.
Mr. Levitt said the SEC planned to address broken' compensation and the amount of education they receive. The underlying aim: to enhance investor confidence.
The SEC also. plans to start scrutinizingTM investment products other than mutual funds.
"We are going tO be looking at unit investment trusts, closedend funds, and variable annuities," Mr. Levitt said.
If freebies are any barometer of any industry's health, then business is good.
Giveaways at the institute conference ranged.from the traditional pens and key chains to pictures with cardboard versions of President and Mrs. Clinton.
Blue-and-white baseball caps emblazzoned with Bankers Trust's logo were a hot item, but not nearly as popular as the homemade pretzels and Dove bars that drew hungry hordes of fund company executives.
