Academic journal article ABA Banking Journal

Bank Mutual Fund Customers No Less Savvy, Joint SEC-OCC Survey Shows

Academic journal article ABA Banking Journal

Bank Mutual Fund Customers No Less Savvy, Joint SEC-OCC Survey Shows

Article excerpt

Investors in bank-sold mutual funds are not the poor benighted pigeons that some interests have attempted to paint them as. On the other hand, they and other mutual-fund investors may have a few lessons to learn about mutual funds yet.

So says a new study from the Comptroller's Office and the Securities and Exchange Commission. The research indicates that investors who buy mutual funds from banks generally have the same level of understanding of investment risks as customers who buy mutual funds from such other sources as brokers, pension plans, and mutual fund companies.

"This is noteworthy because bank customers tend on average to be older and less well educated with lower incomes than those who buy mutual funds through other distribution channels," the agencies observed. The study, performed by Market Facts, an Illinois research firm, was based on a telephone poll of 2,000 mutual fund shareholders.

The assets of mutual funds sold through banks have more than quadrupled from 1990 through yearend 1995, according to federal figures. However, bank-sold mutual funds still account for a minority--14%--portion of overall mutual funds assets.

Key findings about bank customers

The survey reported the following key points demonstrating that bank customers and other mutual fund buyers approach the investments from common points:

1. 93.9% of investors at banks understood they could lose money with their investment in an equity fund, compared with 94% of all mutual-fund investors.

2. 72.8% of bank investors understood the risks of a bond fund, compared with 71.8% of all investors.

3. 64% of bank investors understood the risks of money-market funds, compared with 63. …

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