Academic journal article ABA Banking Journal

Bank Trust Departments Remain the Best Investors

Academic journal article ABA Banking Journal

Bank Trust Departments Remain the Best Investors

Article excerpt

Commercial bank trust departments continue to achieve consistently strong investment results on equity investments over the long term, according to an independent study conducted by CDA Investment Technologies Inc.

Over the 10-year period ended Dec. 31, 1991, banks outperformed mutual funds, insurance companies, and investment advisors in equity funds under management. Banks achieved higher returns over the past three- and five-year periods as well.

Additionally, fixed-income returns were competitive with those achieved by mutual funds and insurance companies over the same periods.

High-yield issues led the fixed-income market during 1991, with those issues, in the aggregate, up 39.1%. Banks largely avoided this higher risk sector of the market, leading to slightly lower returns than those achieved by insurance companies and mutual funds.

For the one-year period, bank equity performance was greater than the Standard and Poor's 500, but behind that of investment advisors and insurance companies. Last year was a banner year for small capitalization stocks, and banks have historically favored small cap positions. …

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