An African-American-owned bank with just $160 million of assets has taken the unusual step of launching its own mutual fund.
Liberty Bank and Trust Co. of New Orleans unveiled the Liberty Freedom Fund last week. The fund, which began trading Monday, invests in large- capitalization companies chosen from among the Standard & Poor's 500.
The move makes Liberty one of the smallest banks in the country to run a mutual fund. Only 111 banks did so as of March 31, according to data from Lipper Analytical Services, and nearly all were banks with assets in the billions.
What's more, it is the first fund to be sponsored by an African-American bank, said Alden J. McDonald Jr., Liberty's president and chief executive officer, at a press briefing in New York last week.
"This is a whole new opportunity to bring new investors into the market," Mr. McDonald said. "It's a new generation of investment and a new generation of investors."
Founded in 1972, Liberty Bank has made its name by reaching out to African-Americans. Among other things, the bank broadcasts a weekly half- hour television program during which viewers can call in with questions.
In an interview last week, Mr. McDonald said that having a mutual fund will help the bank remain competitive and offer customers-77% of whom are African-American-a safe and easy way to earn money. Though he stressed that he expects the fund to have broad appeal, African-American investors are clearly the target.
"This is the first wave of African-Americans coming through the marketplace with retirement dollars of significant value," he said. "We feel that we're in the position to help them grow their equity."
The bank's distributor, Jackson, Shanklin & Sonia Investments, New Orleans, had taken $10 million in pre-orders before the fund launch, he said, adding that he hoped the fund would soon have $100 million of assets under management.
The fund is managed by Randall R. Eley, who in 1997 was ranked fifth in the country by Nelson's. He said in an interview that he hopes eventually to add funds that would invest in small and mid-cap stocks.
Separately, the bank will open an insurance division, Liberty Insurance Agency, within 60 days, Mr. McDonald said.
