WASHINGTON - Bankers Trust Co. has developed a pair of mutual funds for a notoriously risk-conscious group of investions: other banks.
The two new funds in the bank's BT Institutional Fund family will invest only in high-quality, low-risk securities.
As result, banks that purchase shares will be able to carry the investments at the 20% risk-based capital weighting, said Joseph Demmler, a Bankers Trust vice pyesident.
Bankers Trust is . targeting commercial banks with less than $2 billion and thrifts with less than $4 billion in assets an prospective investors, Mr. Demmler told an American Bankers Association mutual fund workshop here.
The BT Institutional Funds will offer these banking and thrifts professional investment advice and better investment returns than they could obtain on their own, he added.
The fund prospectuses "will say on the cover, that every security in the portfolio will conform with the risk-weighting requirements set forth by regulators," Mr. Demmler said.
Though at least one big money manager - Goldman Sachs - has crafted mutual funds that satisfy banks' risk-based capital requirements, Bankers Trust appears to be the first bank to introduce such a product.
PNC Bank Corp., meanwhile, is mulling a similar strategy.
"We're very interested in marketing to banks for their own portfolios," said Scott F. Moss, senior vice president for client relations at PNC Institutional Management Corp., Wilmington, Del. "We see it as being a potential alternative to federal funds."
The first of the new BT Institutional portfolios - a short- and intermediate-term U.S government fund - was approved by the Securities and Exchange Commission on June 7, and should be offered for sale on July 1, Mr. Demmier said in an interview following his speech.
The second portfolio - a mortgage-backed securities fund - is in registration but should be on the market by August. he added.
Bankers Trust plans to seed each fund with $100.000 of its own money to ahsorb initial expenses.
Sumitomo Bank of California will join forces with an outside company to jump into the mutual fund and annuity business in September.
James Mitchell & Co., a provider of investment products and services to financial institutions, will deploy 16 sales representatives at Sumitomo's 48 branches.
In the first year of business, the two companies expect to reach $ 1 00 million in sales, said Brian Finneran. an executive vice president at Mitchell.
Joint Venture with SEI
Sumitomo, based in San Francisco, is the seventh-largest bank in California with $5 billion in assets. In addition to other products, Sumitomo will offer an SEI Corp. fund family, that will bear a private label. The label Sumitomo will use has not been chosen. Mr. Finneran said. James Mitchell & Co. is a wholly owned subsidiary of JMC broup, which was formerly called Spear Financial Services Inc.
Assets in the Berger Funds surpassed the $ 1 billion mark in mid-May. the Denver-based company announced.
The companis, headed by William M.B. Berger. has two mutual funds in its fold: the Berger 100 Fund and the Berger 101 Fund. The no-load funds are offered through bank brokerages and trust departments, among other sales channels.
Mr. Berger, who has 4 years' investment experience, manages both funds himself.
The Holden Group is offering its vartable-annuity customers the option of investing in portfolios managed by Fidelity Investments.
With the addition of five Fidelity "variable insurance products" funds, the Holden Group now offers eight investment choices. Variable annuities are tax-advantaged insurance contracts that invest in a portfolio of securities to provide a stream of retirement income for holders.
The Fidelity VIP funds offered through the Holden Group are called the money market, growth, asset mariager, index 500, and overseas portfolios.
The Holden Group, based in Los Angeles, administers more than $3.4 billion in annuity assets for over 250,000 policy-holders.