Chemical Bank has launched four stock and bond mutual funds, becoming the last money-center bank to plunge into the business of managing long-term mutual funds.
The bank, which already offers six money-market mutual funds under the Hanover Investment banner, is adding two U.S. government bond funds, a blue chip growth fund, and a growth fund of small-capitalization stocks.
Called Critical Step
The money market funds, offered since 1988, have $3.5 billion of assets under management.
"The launch of our bond and equity funds represents a critical step in the evolution of our investment products strategy," said Gary Sherman, a managing director of Chemical's private banking group.
But one industry observer said Chemical should have been out of the starting gate earlier, given that mutual funds have rapidly evolved into a mainstream investment for consumers.
Tax-Free Funds to Be Added
"They're several years behind all the other large banks," said George Salem of Prudential Securities. "At this point, it's a pretty essential service."
In coming months, the bank will expand its lineup by adding a general tax-free fund and a New York tax-free fund.
The proprietary fund family is a key component of the muchballyhooed program Chemical is rolling out at branches with Boston-based Liberty Financial Services.
Assets on the Increase
Other distribution avenues include Chemical's institutional client base and independent broker-dealers.
Of the four new offerings, Chemical started a U.S. government securities fund and the blue-chip growth fund with about $150 million of assets converted from commingled trust funds. The bank quietly rolled out the funds this spring, and since then assets have increased by about $15 million.
The two other new funds, a short-term government fund and the small-capitalization fund, were started from scratch and now have about $35 million of assets between them.
Chemical offers the Hanover Investment funds on a no-load basis to IRA and 401(k) plan clients, and with loads to most brokerage clients. The maximum load is 3%.