Bank of New York Co. is expanding its proprietary mutual fund family in a bid to attract the emerging affluent to its upper-crust investment management business.

The banking company, which has historically managed assets exclusively for multimillionaires and institutions, began selling six new proprietary mutual funds Thursday.

Requiring a minimum investment of $2,500, the new portfolios are part of what senior executive vice president Newton P.S. Merrill called a "master plan to have more investment products for different levels of investors."

The move, coming as some banks are de-emphasizing their proprietary mutual fund families, shows that others believe the business has staying power.

Bank of New York's $2 billion-asset fund family is small by any measure, but its money management expertise runs deep. The company manages $54 billion of assets.

"They're in a pretty rarefied group there in terms of assets under management," said Robert M. Tetenbaum, executive vice president of First Manhattan Consulting Group. "They have a variety of lines of business that can feed into a mutual fund family."

According to Mr. Merrill, the six additions to the BNY Hamilton Funds will be the centerpiece of an asset allocation account for young professionals that the bank plans to unveil this month. Dubbed InvestmentFocus, the account will be aimed at consumers with at least $100,000 to invest.

"We will now, like many of our competitors, have a very attractive, simple, asset allocation account that we feel will appeal to the entry- level investor," Mr. Merrill said. The funds were formed by reorganizing assets that had been in common trust funds. Bank officials declined to disclose the amount of assets converted.

Mr. Merrill, who has spent nearly his entire 35-year career at Bank of New York, returned in 1994 from a brief stint at Bank of Boston. Having directed Bank of New York's move to combine its private banking, trust, and investment management groups into one division, he has now set his sights on developing services for upper-middle-class customers.

The new emphasis on the emerging affluent is already evident. Brokers in the bank's branches-who, for the first time, were mentioned in the annual report this year-increased sales of mutual funds and annuities by 50% in 1996. These "personal investment centers" sell a wide variety of proprietary and nonproprietary products.

Mr. Merrill spoke about the new funds two days after he was named interim head of retail banking. He is filling in for Richard D. Field, who is to retire May 14.

Although the added duties appear to dovetail nicely with the new emphasis on retail investments, Mr. Merrill insisted the timing was coincidental. He said he intends to remain in charge of private banking, trust, and investment management and that someone else would become the permanent retail chief.

"I've been asked to wear a second hat," he said. "At this point in time it's two separate organizations." He added, however, "Having said it's unrelated, are there ways that the two organizations should be working together? Absolutely. They're already working together."

He said the new fund portfolios were designed to give branch employees a way of offering Bank of New York's vaunted money management services to an underserved segment of its customer base-not to turn the bank into a fund powerhouse.

"You can see very quickly with a core offering of 10 funds it's probably unlikely that we're going to take full-page ads to go against Dreyfus or Fidelity with their vast array of fund offerings," Mr. Merrill said. "This is not our primary purpose."

The new portfolios are large cap growth, small cap growth, international equity, intermediate investment grade, intermediate tax exempt, and treasury money. They round out a product line that already included equity income, intermediate government, intermediate New York tax-exempt, and money market portfolios.

Observers said the expansion of the fund business was overdue. "It was a shortcoming they had too few funds until now," said George M. Salem, an analyst at Gerard Klauer Mattison. "They're certainly capable and they have a long history as money managers."

Mr. Salem added it stands to reason Bank of New York has no plans to aggressively advertise the new funds, given that it has a large enough client base to support them.

Indeed, he said, any excessive zeal could offend another segment of core clients: other mutual fund managers. Bank of New York has $531 billion of mutual fund assets under custody for 83 investment managers. "I'm sure they don't want to create an impression they're competing with clients," Mr. Salem said.

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