Though U.S. mutual fund sales in April witnessed a 93.5% increase over March, sales at many bank investment programs were flat for that period.
Bank customers, who tend to be more conservative than the average fund investor, were demanding investments with guaranteed returns - certificates of deposit and fixed annuities in particular, executives said.
"It may take the bank customer longer to get comfortable with the equity markets," said Richard Davies, president of First Chicago Investment Services, the brokerage unit of First Chicago Corp.
First Chicago saw no jump in fund sales from March to April.
"Our customer is a more conservative investor; he may still feel stung by the bond market slump last year," Mr. Davies said.
The Investment Company Institute, a Washington-based trade association for the mutual fund industry, reported that investors poured $9.4 billion of fresh money into mutual funds in April, compared with $4.9 billion in March.
Sales were lower than the extraordinary high of $10.1 billion in April 1994.
Stock funds alone took in new sales of $9.8 billion, up 38% from March, and about $1 billion less than April of last year.
Also, bond fund sales remained steady. Money being siphoned from bond funds after last year's slump slowed considerably in April. Investors pulled $388.3 million out of bond funds, compared with $2.2 billion in March.
Bankers and mutual fund executives said April sales are seasonally high as investors contribute to individual retirement accounts to get tax advantages .
But mutual funds are also becoming more attractive as interest rates, which steadily ticked up last year have settled, and the bond market has stabilized.
Still, many bank customers are leery because they got burned in their first mutual fund investments - rolling CD money into bond funds - last year.
"What we've seen in general in 1995 is a substantial reduction in the volume of mutual fund transactions," said Henry Clines, chief executive of TradeStar Investments Inc.
Mr. Clines' Houston-based firm supplies banks with registered representatives, and is an affiliate of broker-dealer BHC Financial, Philadelphia.
Mr. Clines said mutual fund sales for his firm, which sells through 50 banks across the country, plummeted 50% from March to April because bank customers want fixed annuities for their guaranteed returns, and variable annuities for that product's insurance components.
"Annuities were a very minor part of the sales activities of our reps in the past. Now they are equal to what we are doing in mutual funds," Mr. Clines said.
He added, "The equity funds have done all right through banks, but generally the first step of a CD investor has been to the bond mutual funds because of the perceived safety."
Even though sales through many banks were flat from March to April, they recovered greatly in the first quarter compared to the second half of last year, when the bond market nosedived.
A few banks are even showing more sales for April over the same period last year when mutual funds sales were high.
Lincoln Yersin, president of AmSouth Investment services, Birmingham, Ala., said, this year's first quarter was up 20% over the year-earlier period.
He couldn't explain why sales for "March and April were darn near the same." And he added that AmSouth's annuity sales were actually down slightly.
But Mr. Yersin said mutual fund sales had rebounded because last year's bond slump taught his bank the value of diversifying customer assets.
"We've gotten back to basics and focused on really profiling our customers, and really making sure we're matching their needs with the services we offer," he said.
Bank of Boston Corp. bucked a pattern of flattening sales even though CDs remain popular. The banking company saw mutual fund sales for April rise over March by about 10%, said Allen W. Croessmann, managing director, retail marketing and investment services.
"It's been a very good five months for us, particularly since a lot of bank products are more competitive than they were last year," he said. "That's because, by and large, interest rates on deposit products are up from a year ago."
Mr. Croessmann attributed some success to an advertising campaign for Bank of Boston's mutual fund offerings that was launched in January - when other banks were pushing their CDs and annuities.
Along with its standard sales of U.S. Treasury bonds, the bank is selling more money market, equity, and even bond mutual funds than it did last year.
"At this time a year ago, we were selling largely stock funds and money market funds and hardly ever any bond funds," proving the worst is over, he said
Despite reports that stock mutual fund sales in general were beginning to taper off in May, Mr. Croessmann said May sales should come in higher than April's.
Putnam Investments, Boston, a leading seller of mutual funds through banks, has seen volume increase by 25% month over month, said Lou Tasiopoulos, managing director, financial institutions division.
"I attribute that mostly to the fact that we have had a decrease in interest rates," he said.