Conventional wisdom holds that when bank customers invest in mutual funds, they gravitate toward the conservative choice: bond funds.

But Colonial Group Inc., a Boston-based fund company, has a different story to tell.

Increasingly, bank customers are selecting equity mutual funds, according to William S. Ennis, senior vice president in charge of bank sales. Stock portfolios now account for 30% of Colonial's sales through banks, up from 10% last year, he said.

|Training Wheels'

Granted, bank customers' tastes still run to the low-risk end of the spectrum. Colonial's best seller is its utilities fund -- "a growth fund with training wheels," as Mr. Ennis puts it.

But he expects bank customers to venture further into the stock-fund arena. One reason is that bond funds are losing their luster because their returns have dipped nearly as low as the yields on bank certificates of deposit.

The Colonial Utilities Fund has proved popular with bank customers because it has 40% less volatility risk than the Standard & Poor's average of 500 stocks, Mr. Ennis said. The investment returned 15.6% last year and averaged a 10.7% annual total return over the past 10 years.

Though Colonial executives were initially surprised by the burst in popularity of stock funds, they now expect equity sales to grow to as much as 40% of the mix.

Overall sales are also growing. Sales jumped 172% last year, from $1.8 billion to $3.1 billion.

The 62-year-old company emphasizes its conservative, "no surprise" tradition in its dealings with banks.

"We are a Yankee, parochial company when it comes to people's money," Mr. Ennis said.

Colonial, which has $13 billion under management, now offers 35 mutual funds and will roll out four more by late fall.

Mr. Ennis, who took over as head of bank sales in May when John O. Myers left for Bank-America Corp., said banks are in the mutual fund business permanently, regardless of future shifts in the economic landscape. So he wants to help banks learn how to sell.

"My motto is: |A rising tide raises all ships,'" Mr. Ennis said.

Bank Sales Loom Larger

Four years ago, only 2% of Colonial's sales were through banks. In 1991 bank sales climbed to 19%, and in 1992 they rose to 28%, with $772 million sold through banks.

By the end of next year, Mr. Ennis predicts, banks will account for 40% of Colonial's fund sales.

Colonial, which has been marketing its products to banks for five years, created a bank distribution division 18 months ago.

The division's 40 employees include 13 wholesalers who travel the country, marketing funds to Colonial's 400 client banks. Mr. Ennis said that only Putnam Investments, the Boston rival he worked for until joining Colonial in 1986, has as large a team of dedicated wholesalers.

One of Colonial's services to banks is a teller training program. Begun eight months ago, the course helps tellers to spot potential fund buyers and refer them to investment advisers within the bank.

Mr. Ennis believes cross-selling products is essential to the success of bank fund programs.

In an unusual twist, tellers are also tutored in the dynamics of the stock market. Mr. Ennis thinks this helps create a better sales environment.

The training session takes between 45 minutes and 1 1/2 hours, he said.

|Serious 6' Program

Next month Colonial will roll out a sales training program for banks' own "Series 6" sales force, made up of employees who hold a limited brokerage license from the National Association of Securities Dealers.

The program will be tailored to individual banks' needs and will take from an hour to three days to complete, Mr. Ennis said.

"The great thing about banks that I see is that they gravitate toward consultative, needs-based selling," he said.

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