Banks may be fumbling an opportunity to cash in on investor demand for mutual funds because they are resisting a popular and profitable new way of selling them.

Mutual fund wrap accounts, in which investors pay an annual fee in place of up-front commissions, attracted $20 billion in sales last year, up 15% from 1997, according to Strategic Insight, a New York research firm. Industry watchers say wrap accounts may bring in one-quarter of all mutual fund sales within five years.

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