Banks boosted their stock and bond mutual fund assets by more than 50% in the 12-month period that ended March 31, far outpacing the mutual fund industry at large.
Stock and bond fund assets managed by banks grew to $88.1 billion in March 1994, from $57.6 billion a year earlier, according to data prepared for the American Banker by Lipper Analytical Services, Summit, N.J.
In contrast, fund companies in general boosted their stock and bond fund assets 25% in the 12-month period, to $1.501 trillion from $1.205 trillion.
Money Funds Predominate
Despite their big strides, banks still manage far more assets in money market mutual funds - $130.9 billion - than in long-term stock and bond funds. At most fund companies, the opposite is true.
Growth in banks' stock and bond fund assets merits close attention because banks' progress in gathering assets in these accounts is considered a litmus test of their ability to compete in the booming retail mutual fund business.
Though banks are making significant gains, they control just a sliver of long-term mutual fund assets. And much of these assets have come from conversions of trust assets and from sales to institutional clients, not individuals.
Bank-managed stock and bond funds represented 6% of all long-term mutual fund assets as of March 31.
10.5% of the Pie
When money market assets are added in, banks' mutual fund assets swell to $219 billion as of March 31, 10.5% of the $2.083 billion invested in all mutual funds.
The data show that 20 of the top 25 banks boosted their fund assets in the past year. Those that lost assets took their hits in the money market category, for the most part. Balances of these funds tend to decline when interest rates are low, as they have been in the past year.
Bane One Corp. led the top 25 in gains, increasing its fund assets 81% to $8.2 billion, from $4.5 billion a year ago.
But the bulk of the asset growth came from trust and institutional sales, not from retail sales. according to Michelle Lenzmeier, senior managing director, Banc One Investment Advisers, a unit of the Columbus, Ohio, banking company.
Back-End Loads Popular
Ms. Lenzmeier said one reason retail sales have lagged is that, until recently, Bane One's proprietary One Group of Funds lacked a desirable feature: backend sales loads. The pricing option, which enables fund buyers to defer payment of commissions until investments are withdrawn, has been extremely popular with bank customers.
"Eighty percent of the sales by our brokerage are in back-end loads," Ms. Lenzmeier said.
With the addition of back-end loads and a continued sales push throughout the Bane One network, retail assets should begin to rise in the year ahead, Ms. Lenzmeier said.
Other banks that recorded big asset gains in the one-year period are Keycorp, which boosted its fund asset 75%, to $4.8 billion, and Chase Manhattan Corp., which managed $5.4 billion in assets as of March 31, up 66%.
Chase Manhattan's business has been helped along by extremely good investment results in three funds, according to Geoff Bobroff, a Denver-based mutual fund consultant. "They've been blessed by good performance," he said.
In the quarter that ended March 31, bank-managed mutual fund assets grew by a meager $1.27 billion. The first-quarter advance of 0.6% lagged behind the 3.6% growth rate of the fund industry in general.
Mr. Bobroff said it was a difficult quarter for gathering assets, with many fund companies making gains in January and February only to give them back in March.
PNC Bank Corp., NationsBank Corp., and BankAmerica Corp. held on to the win, place, and show positions in the asset rankings for the second consecutive quarter. Their fund assets totaled $19 billion, $14.3 billion, and $10.4 billion, respectively.
Banc One crept into fourth place, nudging aside Wells Fargo & Co., which fell to fifth with $8.1 billion in assets under management.
Wells Fargo occupied first place among banks that manage retail mutual funds, with $7.1 billion in retail assets.
PNC topped the list of institutional fund managers, with $17.7 billion in such accounts. Leading the Pack Top banks in mutual fund management in billions ofdollars, as of March 31 Stock and bond funds Money market fundsNationsBank $5.8 PNC $16.2Wells Fargo & Co. 5.5 BankAmerica 9.4Banc One 4.4 NationsBank 8.5First of America 3.3 Northern Trust 5.8SunTrust 3.3 Banc One 3.8Source: Lipper Analytical Services