Investors in international and global mutual funds are a different ilk from typical retail bank fund customers, according to bankers.
And that may help explain why, despite a proliferation of funds that invest abroad, many bank retail customers have so far taken a pass.
Banks launched 18 overseas funds last year and 22 in 1994, bringing the total of bank international and global funds to 91, according to Lipper Analytical Services, Summit, N.J.
Yet so far, many bankers said, retail bank customers have remained cool to the offerings.
"We do very little in global and international funds," said Joseph Cooney, president of First Security Corp.'s broker-dealer. Instead, he said, his retail customers retain "an emphasis on income and capital preservation," which has translated into an overwhelming majority of sales in domestic bond funds.
A look at a recent Investment Company Institute study, which surveyed 1,165 mutual fund shareholders last July, shed light on why traditional bank fund buyers haven't embraced overseas funds.
The study found how buyers of international funds, which invest only outside the United States, and global funds, which mix U.S. and overseas assets, differ from investors who stick to domestic funds.
The median shareholder in international and global funds has more money in funds overall than the investor whose only mutual funds are all- domestic, the study found - $40,000 versus $12,000. They also put more of their assets into funds, 50% versus 24%.
Shareholders of international and global funds were also less likely to buy primarily through a bank. Only 6% of this group had done so, versus 12% for domestic-only investors.
Perhaps most important, overseas investors were more willing to take risks. One-third of mutual fund shareholders who invest abroad - compared with one-quarter of those who don't - were willing to take above-average risks for above-average gains.
As further evidence of their more adventuresome ways, nine out of 10 investors in overseas funds had previously invested in stock funds, compared to 70% of domestic-only investors.
But even at bank brokerages that sell plenty of stock funds, customers aren't breaking down the doors in search of overseas options.
Sales of stock or stock mutual funds account for 75% of volume at Crestar Securities Inc., but sales of overseas funds amount to less than 5% of total sales, said C. Bayne Northern, senior vice president and managing director of Crestar Financial Corp.'s brokerage subsidiary.
"If one of our customers is going into international, it's at the recommendation of a bank broker," she explained.
A growing number of bank brokerages, however, including those at PNC Bank Corp. and Boatmen's Bancshares, are trying to educate consumers about international investing.
