In the second quarter, bankmanaged mutual funds posted better returns than the industry as whole in rocky market conditions.

While most funds lost money for investors in the period, funds run by banks had slightly smaller losses. For example, bankmanaged equity funds lost 1.6%, versus a 2.11% loss for all equity funds.

The performance, which follows three years in which bank funds trailed the industry, lends credence to the view that banks are relatively conservative mutual fund managers.

"That seems to be true, because they aren't performing as poorly as the universe of funds," said Richard Tierney, an operations manager for CDA/Wiesenberger, of Rockville, Md., which compiled the data.

Seen as Conservative

The theory is that while conservative funds gain less in bull markets, they lose less when bears are loose, as has been the case this year.

Banks are believed to be conservative fund managers because they are new to the business and have concentrated on basic offerings before trying riskier funds.

Additionally, conservative investing is believed to mesh well with banks' traditional business of protecting customers' deposits.

While the data conforms with the view that banks are relatively conservative investors, the difference was slight across all types of funds.

Bank-Fund Breakdown

Bank-managed taxable bond funds, for example, lost 1.16%, just over a tenth of a percent less than was lost by all funds of this category.

Bank managed mixed and tax exempted bond funds bested their peers by only a few hundredths of a percent.

In the first quarter, bankmanaged bond funds posted slightly smaller declines than all bond funds, and bank-managed equity and mixed funds registered declines that were slightly larger.

Three-year gains for bankmanaged equity and taxable bond funds were nearly 1% below the industry as a whole.

Three-year gains in mixed and tax-exempt funds managed by banks trailed the industry by roughly 30 basis points.

In the secondquarter, CDA/ Wiesenberger tracked 965 bankmanaged mutual funds, roughly a fifth of all mutual funds in the industry.

According to Mr. Tierney, the banks did especially well in international equity funds. The 49 such funds managed by banks gained an average of 0.64% in the second quarter, contrasted to a loss of 0.26 for all of these funds.

Indeed, the best-performing bank fund in the second quarter, just as it was in the first quarter, was J.P. Morgan & Co.'s Pierpont International Fund.

This fund gained 4.68% in the second quarter, and 8.47% for the year.

Lead portfolio manager Paul Quinsee, in London, said the fund benefited from its heavy investing in Japan, where markets gained.

The fired now holds about 55% of its assets in Japan, and is planning to keep them there for the time being, Mr. Quinsee said.

But betting on Japan cost the fund in the fourth quarter of last year, because markets dropped. As a result, the fund's one-year gain of 13.72% ranked it 214th out of the 299 international equity funds tracked by CDA/Wiesenberger.

Popularity Gain

By contrast, in the first half of this year, the fund ranked 25th out of 326 international equity funds.

The fund's performance this year appears to making it more popular with investors.

Eve E. Guernsey, a J.P. Morfan managing director, said that total assets of the Pierpont International Fund this year have risen from $158 million to $204 million.

An institutional portfolio of the same investment fund has grown from $60 million to $180 million of assets.

Total accounts in both funds have grown from 1,000 to 1,500.

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