In an move to attract cautious bank customers to new mutual fund products, Dreyfus Corp. is introducing funds that invest in insured municipal bonds.

Dreyfus recently began marketing an insured municipal-bond fund for California residents, and plans to launch eight more state-specific funds over the next six months, said Elie Genadry, president of institutional services at the New York-based mutual fund company.

The insured-bond funds will be sold exclusively through banks, broker-dealers and financial planners, Mr. Genadry said.

Marketing Opportunity Seen

Dreyfus, one of the nation's largest financial services companies, manages more than 200 mutual funds with more than $80 billion of assets.

The company sees a big opportunity in marketing bond funds to bank customers.

"We analyzed our markets and determined that bank customers are savers who have turned into investors," said Mr. Genadry. "They have demonstrated over and over again their affinity for fixed-income products."

Bonds Privately Insured

Municipal funds, which offer investors a way to shelter income from taxes, are seen as particularly attractive. Given bank customers' cautious nature, Mr. Genadry said, insured municipal funds should hold a special appeal.

Though the funds themselves are not guaranteed, they invest exclusively in bonds that are privately insured. That should provide an extra measure of comfort to investors in economically distressed states;

"In places like New York, California and Florida, people are worried about the economic health of their state governments," Mr. Genadry said. "With an insured fund, they can alleviate some of that worry and still participate in a strong investment vehicle."

Security a Concern

Industry observers say that targeting insured products to the bank channel makes sense particularly in states with economic problems.

"It's no secret that bank customers tend to be concerned with safety and security," said John Sunderland, principal at First Annapolis Consulting in Annapolis, Md.

"If a mutual fund company can provide an insured product at a materially higher yield to compete with other insured products, then they should attract customers," Mr. Sunderland said.

Mr. Genadry anticipates that sales of insured-bond funds will rise as investors come to grips with the tax changes mandated by President Clinton's tax plan.

"People are still waking up to the implications of the plan," he said. "As time goes on, my sense is that we are going to see a continued surge in the sale of tax-exempt investments, insured and otherwise," he said.

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