KANSAS CITY, MO. - Investors have been quick to open mutual fund accounts online, according to a recent study.
An Internet adoption study by American Century Investments found that 8% of investors who have ever visited the Web site of a mutual fund company have opened a mutual fund account online. And such a transaction only became possible Oct. 1, when legislation affording electronic signatures the same legal standing as handwritten signatures went into effect.
Of the 250 mutual fund investors with Internet access who were surveyed by market research firm Elrick & Lavidge, another 8%, or 20 people, said that they expected to open a new account online.
Beth Randolph Taylor, a spokeswoman for American Century, said that the company had been among those pushing for the e-signature legislation, since it would make it easier for new customers to open accounts. Still, the company was surprised by the initial response.
"The first day it was available, customers were opening accounts," Ms. Taylor said. So far, about 800 investors have opened new retail or brokerage accounts with American Century via the Internet, even though American Century has not actively marketed the service and the capability is not prominently displayed on the fund company's Web site, she said.
Because American Century is known for its aggressive growth investment strategy, "we tend to attract investors to are very tech-savvy," she said. "We wanted to give consumers an opportunity to have a total online relationship if they choose."
American Century plans to let customers open IRA accounts online beginning in the first quarter of 2001, Ms. Taylor said.
Anecdotal evidence suggests that investors remain a bit wary, though. Ms. Taylor said that a lot of the online investors "will open an account with the minimum, wait to see if it works, then put in pretty sizable amounts of money."
American Century, 45% of which is owned by what will become New York-based J.P. Morgan Chase & Co., manages about $100 billion of investments.