Seeking to lure do-it-yourself investors, more and more banks are offering mutual funds with no up-front sales charges.

Star Banc Corp., Cincinnati, is the latest, launching a family of funds without the fees, known as loads.

Chase Manhattan Corp., meanwhile, is considering no-load funds, says an executive there. And Fleet Financial Group, which began charging the fees two years ago, may soon drop them again, sources say.

Most banks that run retail mutual funds charge loads to cover the costs of advising clients. But as consumers bone up on funds through the media and rating services, they are increasingly shunning brokers' advice-and the fees.

Many investors "will not buy a load fund in any way, shape or form," said Peter Sorrentino, vice president and director of research at Star Bank.

Star kicked off its new family this month with a real estate fund, and in November will add a fund pegged to the Standard & Poor's 500-stock index, Mr. Sorrentino said. More offerings are to follow, though he declined to elaborate.

The decision to drop loads is far more than a pricing question. It also affects the way a bank distributes its funds and compensates its brokers. Consumers typically buy no-loads over the telephone or through electronic marketplaces, rather than through brokers.

NationsBank Corp., for instance, offers load funds through its brokers and, to reach do-it-yourself investors, makes no-loads available on electronic supermarkets.

Citicorp last year launched an asset-allocation product, the CitiSelect Funds, with the load temporarily waived. When the product proved popular with that pricing structure, Citicorp waived the fee indefinitely. The company also sells funds that charge a load.

Though no-load funds can pull in assets quickly, experts say the strategy works only when backed up by aggressive marketing and advertising.

"The key to (selling) no-load is publicizing well," said Joy P. Montgomery, a consultant at Money Marketing Initiatives, Morristown, N.J.

And, if a bank wants to peddle no-loads through its brokers, it may have to rejigger compensation plans. Motivating salespeople to sell a proprietary product without a sales commission can be a tough sell, consultants say.

BankBoston Corp., in offering no-loads, pays its sales force salaries, plus a bonus from commissions pooled from sales of third-party funds that do charge a load, said Allen W. Croessman, director of the bank's fund division. While he declined to elaborate, he said the bank's sales force is also compensated for the assets under management, no matter what products are sold.

The Star Funds, for their part, are available through a toll-free telephone number, on the bank's Internet Web site, and through the popular no-transaction-fee fund supermarket at Jack White. The bank is negotiating to sell the Star Select Funds on Charles Schwab & Co.'s One Source, Mr. Sorrentino said.

Few people are suggesting that banks throw in the towel on loads, which often amount to 4% on the investment.

"A large segment of the population will continue to want advice for the purchase of mutual funds, and are willing to pay for that advice," said Donald E. McNees, principal at Towers Perrin, New York.

But, he said, a growing number of people "will simply not pay a load. They are quite comfortable dealing on a self-service and self-directed basis."

That means banks may have to take a long, hard look at the customer bases.

Union Bank of California, for example, had planned to drop loads later this year from its Highmark Funds, said R. Gregory Knopf, managing director of the fund division. But the bank decided against it after doing some market research.

"We found that only 1% of our customers own our funds," Mr. Knopf said. With about 37% of U.S. households invested in mutual funds, the bank had not tapped that immediate market for its full potential, he said. So the bank will focus on advising and selling to its own customers-and that means loads.

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