Assets in bank money market mutual funds have been growing at a faster pace than assets of their nonbank counterparts, according to the latest report from IBC Financial Data Inc.
From Jan. 5 to June 4, bank-run money funds grew 11.5%, to $180.3 billion, IBC said. Since January, banks' share of all money fund assets has grown to 21.8%, from 21.2%.
By comparison, nonbank money market funds grew 7.8%, to $648.5 billion, during the same period.
While nonbanks still dominate the money fund arena, observers said banks' share of these assets is increasing at a healthy pace as more bank customers turn to mutual funds for investing and savings.
"The banks have been going out there and pushing" their money funds, said Tracy Burk, editor of IBC's Money Fund Report.
She added that banks have done a good job of attracting novice investors, who previously were "more involved in their bank savings products than in investments."
The increase in bank money fund assets comes as the number of these funds shrinks due to bank mergers and subsequent consolidations of their proprietary mutual fund families.
At June 4, 474 money market mutual funds were run by banks - eight fewer than at the beginning of 1996, IBC said.
Banc One Corp., for instance, recently merged most of the mutual fund portfolios of recently acquired Premier Bancorp into its proprietary One Group of Funds.
Roger C. Hale, managing director of short-term investments at Banc One Investment Advisors, said the company's money market fund assets have grown at the industry rate since Jan. 1.
He said the steady flow of dollars is coming from investors who "may have some concerns that the equity market has hit its high. They might be a little more cautious at this point."