Bankers Trust Co., Firstier Bank, and Bank of America last year ran the best-performing funds in a researcher's ranking of institutional portfolios.
The rankings, compiled by TIS/Cadence, Rockville, Md., rated the performance of commingled trust funds, which pool money from pension and other employee benefit plans.
Splitting the data among basic investing styles, TIS/Cadence found that New York-based Bankers Trust ran the best performing aggressive growth commingled trust fund of the 71 funds of this type tracked by the researcher. The portfolio reported a total return of 7.4%.
Robert G. Burke, a managing director of global investments for Bankers Trust, said this portfolio was a small capitalization stock fund focusing on health care and technology companies run by portfolio manager Mary Lisanti.
Meanwhile, Bank of America, San Francisco, had the best performing fund in the common stock category, with a portfolio that posted an 8.63% return, the best of the 236 portfolios of this type tracked by TIS/Cadence.
Firstier Bank, Omaha, took top honors in the fixed income category, with a portfolio that had an 8.4% return, the best of 230 funds.
Such high-flying returns can be important since the business of managing commingled trust funds is a huge one for many banks.
Because commingled trust funds tend to have rock-bottom expense ratios, and because they employ a bank as trustee to protect the interests of the funds' beneficiaries, these funds have a huge chunk of the money banks invest for institutional investors.
For example, Mr. Burke said commingled trust funds have just over half of the $159 billion Bankers Trust invests for customers. He added that bank-managed portfolios overall have about a third of the money invested by institutional investors.
Mr. Burke and other experts also said the commingled trust fund business is becoming more competitive, as more nonbanks try to woo institutional investors from banks.
"Everybody wants to be in our business," said Frank I. Harding, executive vice president of KeyCorp, Cleveland.
As a result, bad performance can be deadly. But last year, according to TIS/Cadence's data, several bank-managed commingled funds were dogs.
For example, an aggressive growth fund managed by Princeton Bank & Trust, in N.J., was the worst performer in its group, with a loss of 17.12%.
First Union National Bank, Charlotte, had the worst performing common stock fund, with a portfolio that lost 10.46%. Sanwa Bank of California, in Los Angeles, had the worst performing fixed income fund, with a portfolio that lost 11.42%.