Fleet Financial Group is finding fertile ground for mutual fund sales right in its own backyard.

Fleet's banking customers helped fuel a startling 139% sales jump in the company's Galaxy Funds during the first half. The sales, totaling $449 million, pushed retail assets under management to about $6.5 billion.

Some 6% of Fleet's banking customers invest in the funds, up from 3.8% a little over a year ago, said Robert L. Ash, a managing director of Fleet Investment Management.

Fleet is trying to ensure that its bank customers are not taking their investment dollars to companies like Merrill Lynch & Co. and PaineWebber Inc., Mr. Ash said.

And once investors put money in the funds, Mr. Ash wants to ensure they are in for the long haul.

He credits an investor education program with keeping redemptions at Galaxy to less than half the industry norm of 15% to 17%.

"You get better performance if you don't have the turnover of assets," he said.

The recent sales performance has clearly impressed some observers.

"It validates a lot of things that they've done," said Joy Montgomery, president of Money Marketing Initiatives, Basking Ridge, N.J.

She did offer one note of caution: "Not to take away from their efforts, but the bull market didn't hurt."

According to Mr. Ash, the Galaxy Funds' performance has never been an issue. "It was just a question of packaging it," he said.

The company has added wholesalers who sell the Galaxy Funds as aggressively to its own investment advisers as they would to a third-party distributor, he said.

But Boston-based Fleet has not just mined its customer base. It also has been making a concerted effort to reach noncustomers, Mr. Ash said.

It has also been pushing nationwide through its discount brokerage subsidiary, Quick & Reilly Inc., and distribution agreements with other companies.

Fleet will look to distribute the Galaxy Funds through Charles Schwab & Co.'s immensely popular mutual fund supermarket, OneSource, by the end of the year, said Linda Goodwin, a senior vice president and director of marketing for Fleet Investment Management.

"We will be on a lot of different companies' (fund marts)," Ms. Goodwin said.

Fleet will also continue the extensive branding campaign, with a reported price tag of $10 million, that it started this year for the Galaxy complex.

In touting the Galaxy Funds, the bank has already targeted readers of mainstream publications like Newsweek and People and will continue to try to maintain a high profile, Mr. Ash said.

"We're still jogging," he said. "'We haven't even reached our running speed, even within Fleet's customer base."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.