In an apparent first, Wells Fargo Bank has made it possible for customers to buy and redeem shares of its proprietary equity mutual funds at automated teller machines.

The San Francisco-based bank announced last week that it has added the unusual capability to all but 40 of its 1,700 ATMs.

Consultants say making information and transaction capabilities available through ATMs is crucial to convincing customers that bank-managed mutual funds are a core product, not a sideline.

Tricky Business

A handful of banks have made it possible for customers to trade shares of proprietary money-market mutual funds over ATMs.

However, executing equity and bond fund trades by ATM is much trickier.

Whereas money market mutual funds are traded at a constant price of $1 per share, equity and bond fund shares fluctuate in price from day to day.

That makes for difficulty in squaring a redemption with the closing price posted later in the day. Consequently, banks have shied away from allowing ATM transactions for equity and bond funds.

Built-In Delay

To overcome the problems, Wells allows only 80% of a holding to be redeemed on any business day.

The cash from the sale is credited to a linked checking account of the customer's choice. The money is typically made available two days after the transaction, according to a 13-page pamphlet Wells Fargo sent to its customers.

The lag allows the bank to make the transaction and square any accounting differences.

In purchasing shares, customers may only add to existing accounts. To make new investments, they must purchase shares the old-fashioned way.

Wells Fargo customers may access up to 10 accounts over ATMs.

One of Wells' major competitors, Bank of America, is studying which investment-product capabilities to add to its ATMs.

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