The Bank Securities Association is challenging the widely held view that most of the growth in bank-managed mutual funds is coming from reorganizations of trust assets.
The trade group, based in California, has unveiled a study showing that sales of bank-managed stock and bond funds totaled $16.3 billion last year, while trust conversions totaled just $2.8 billion.
82% from Sales
That means sales made up 82% of the 19.9 billion in money that, according to the association, flowed into bank-managed stock and bond funds last year from sources other than asset appreciation and capital gains.
Trust conversions accounted for 14% of the total, with bulk transfers of assets and other sources of new money making up the remaining 4%.
The amount of new money flowing into bank-managed mutual funds rose 20% in 1993, from $16.5 billion in 1992, according to the survey.
Sales totaled $11.2 billion in 1992, or 68% of the inflow, while trust conversions came to $4.6 billion, or 28%, the survey found.
The findings should dispel the idea that banks are doing a poor job moving the mutual funds they manage, said Joel Rosenthal, president of Strategic Insight, New York, a consulting firm that conducted the survey with Money Marketing Initiatives, Morristown, N.J.
"Banks are selling mutual funds. It is not all conversations," Mr. Rosenthal said.
The distinction between asset conversions and actual sales is important because "making a conversion is no-brainer," said Joy Montgomery, president of Money Marketing Initiatives.
The Bank Securities Association, a forum for banks in the mutual fund group, based its findings on data gathered from 53 of the 105 U.S. banks that managed mutual funds last year.
Together, these 53 banks managed $166.6 billion in fund assets at the end of 1993, roughly three-quarters of the $219.2 billion in fund assets managed by all U.S. banks. The figures include money market mutual funds as well as a stock and bond funds.
The survey covered a wide range of topics, including profitability, fund structure and pricing, and sales efforts.
In other key findings, the survey found that equity funds were the top sellers in 1993, drawing $7.4 billion in assets. That's more than triple the $2.2 billion of equity funds sold in 1992.
Additionally, 86% of survey participants said they made money managing mutual funds in 1993, and expect to do so again in 1994. And 21% said proprietary mutual funds are contributing $10 million or more to the bottom lines of their banks.
Although Ms. Montgomery emphasized that the survey did not probe for details on where the profits are coming from, she said that this findings provides a counterweight to the "industry" myth that nobody is making money in these things. At least for this group, that is not the case."
Price Changes Considered
The survey also found that more than 80% of participants are planning or considering changes cin their proprietary fund pricing. For instance, 56% of those surveyed said they may or will add a bank-end sales load option to their mutual funds.
People involved with the survey said the association may decide to make it an annual event. The association's president said he was pleased with the first effort.