Asset Rankings of Bank-Managed Funds, Yearend '94

Nearly overnight, it seems, managing mutual funds has become a mainstream banking business.

At the end of 1994, 115 banking companies managed proprietary mutual funds, with assets topping $300 billion, according to Lipper Analytical Services. That's a healthy slice of the $2.164 trillion invested in all mutual funds.

It wasn't always so. In 1990, fewer than two dozen banking companies ran proprietary funds. But the lure of fee income and funds' growing popularity have drawn nearly all of the nation's top 100 banking companies - and even some smaller ones.

As newcomers, most banks are still too busy building the business to worry much about profits. They are plainly making strides in gathering assets: In just one year, the industry's share of the fund market has surged from 10% to 14%.

Still, questions remain whether banks can achieve the economies of scale needed to compete with the titans of the fund industry. This special report explores where banks' fund growth has come from, what it takes to make it in the business, and what banks are doing to stoke sales in a sputtering market.