Bank of N.Y. Aims a Bit Downmarket with New Funds

By Fraser, Katharine | American Banker, May 5, 1997 | Go to article overview

Bank of N.Y. Aims a Bit Downmarket with New Funds


Fraser, Katharine, American Banker


Bank of New York Co. is expanding its proprietary mutual fund family in a bid to attract the emerging affluent to its upper-crust investment management business.

The banking company, which has historically managed assets exclusively for multimillionaires and institutions, began selling six new proprietary mutual funds Thursday.

Requiring a minimum investment of $2,500, the new portfolios are part of what senior executive vice president Newton P.S. Merrill called a "master plan to have more investment products for different levels of investors."

The move, coming as some banks are de-emphasizing their proprietary mutual fund families, shows that others believe the business has staying power.

Bank of New York's $2 billion-asset fund family is small by any measure, but its money management expertise runs deep. The company manages $54 billion of assets.

"They're in a pretty rarefied group there in terms of assets under management," said Robert M. Tetenbaum, executive vice president of First Manhattan Consulting Group. "They have a variety of lines of business that can feed into a mutual fund family."

According to Mr. Merrill, the six additions to the BNY Hamilton Funds will be the centerpiece of an asset allocation account for young professionals that the bank plans to unveil this month. Dubbed InvestmentFocus, the account will be aimed at consumers with at least $100,000 to invest.

"We will now, like many of our competitors, have a very attractive, simple, asset allocation account that we feel will appeal to the entry- level investor," Mr. Merrill said. The funds were formed by reorganizing assets that had been in common trust funds. Bank officials declined to disclose the amount of assets converted.

Mr. Merrill, who has spent nearly his entire 35-year career at Bank of New York, returned in 1994 from a brief stint at Bank of Boston. Having directed Bank of New York's move to combine its private banking, trust, and investment management groups into one division, he has now set his sights on developing services for upper-middle-class customers.

The new emphasis on the emerging affluent is already evident. Brokers in the bank's branches-who, for the first time, were mentioned in the annual report this year-increased sales of mutual funds and annuities by 50% in 1996. These "personal investment centers" sell a wide variety of proprietary and nonproprietary products.

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Bank of N.Y. Aims a Bit Downmarket with New Funds
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