The way Charles J. Mohr of Bisys Group sees it, bank mutual fund families are in the catbird seat at last.
Banks that manage funds have long been criticized for their lopsided weighting in money market and fixed-income portfolios. These investments made up two-thirds of banks' mutual fund assets at midyear, versus just under half for the fund industry as a whole, according to Lipper Analytical Services, Summit, N.J.
But as turmoil in the stock market drives investors to the sidelines, banks' conservative product mix is looking better and better, said Mr. Mohr, president of Bisys' investment services group.
For now, he said, most investors who abandon stock funds are taking shelter in the most conservative of investments-U.S. Treasuries and money market mutual funds.
"Banks are very capably positioned as the flow to money markets increases," Mr. Mohr said during a visit to American Banker's New York office.
To be sure, Mr. Mohr said, "as people get over the panic of the last couple of months, they will move beyond the safety of Treasuries."
But even then, he maintained, banks stand to benefit. He predicted that "the No. 1 performing sector over the next year is going to be municipal bonds," another area where banks have a strong presence.
Mr. Mohr joined Little Falls, N.J.-based Bisys in July as president of a thriving investment services operation that produces half the company's revenues. Its clients include some 30 bank mutual fund families with more than $156 billion of assets, including Chase Manhattan Corp.'s Vista Funds, Bank One Corp.'s One Group of Funds, and Bank of New York's BNY Hamilton Funds.
Mr. Mohr's purview includes three businesses: Bisys Fund Services, a 700-employee unit that provides a range of services to banks that manage funds; Bisys Plan Services, with 300 employees, which helps operate and administer employee benefit plans such as 401(k)s; and a third-party marketer, Corelink Financial, which primarily helps banks with less than $3 billion of assets to offer investment programs.
Though Mr. Mohr is a newcomer to banks, which make up 80% of Bisys' clientele, he is a veteran of the securities industry. Over the past two decades, he has held senior executive positions at SunAmerica Asset Management Corp. and Colonial Management Services, and was chairman and chief executive officer of the Boston Stock Exchange.
Just before joining Bisys, he spent two years with Systematic Financial Management in Teaneck, N.J., launching two hedge funds for the investment firm.
Hedge funds are a good fit for Bisys, Mr. Mohr said, notwithstanding the high-profile troubles of a leading one, Long-Term Capital Management.
"There are lots and lots of good hedge funds out there," he said, and while their returns have deteriorated in recent months, "the average hedge fund is down only half as much as the average mutual fund." Hedge funds, which he described as essentially a private version of a mutual fund, are much in demand among people with upward of $100,000 to invest and with the financial companies that serve these clients, he said.
"We're in the hunt right now" for an acquisition, Mr. Mohr said. "In the next nine to 12 months, we'll be in that business."