Although sales of investment products are slowing, banks are spending more money to advertise financial products, according to a study by KPMG Peat Marwick.

The accounting firm's report, titled "The State of the Investment Company Industry," concluded that banks are increasing their efforts to market mutual funds as well as trust and investment management services.

As part of that effort, banks in the U.S. spent $8.1 million on advertising financial products during the first quarter of 1994, a 44% increase from the $5.6 million spent during the same period of 1993.

Mutual funds received the lion's share of advertising expenditures, KPMG's study showed.

In assessing the industry through July 1994, the New York-based accounting firm concluded that marketing and selling are "critical factors in attracting new investors," as banks continue to increase their presence in the mutual fund business.

Money Fund Assets Gained 1.9% in Week

Assets invested in money market funds surged 1.9% to $633.81 billion in the week ended Dec. 7, reaching their highest level all year, the Investment Company Institute reported.

The total increase of $12.17 billion topped this year's previous record of $11.29 billion which was set the week ended April 6.

The gains were concentrated in funds for institutional investors.

Balances in these funds rose to $184.74 billion, a rise of $7.30 billion for the week. The growth is an illustration that institutional investors are "chasing the best yields they can find," a spokesman for the Washington-based trade group said.

Indeed, taxable money market funds for institutional investors led the gain, growing by $6.16 billion to a total of $160.28 billion.

Balances of tax-exempt funds rose by $1.14 billion to $24.46 billion.

On the retail side, money market assets grew by $4.87 billion to $449.07 billion.

The total includes $ 353.38 billion in taxable funds, up $3.26 billion in the week, and $95.70 billion in tax-exempt funds, a $1.61 billion increase.

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