Magazine article American Banker

Despite Go-Ahead, Few Banks Likely to Tout Records of Funds' Predecessors

Magazine article American Banker

Despite Go-Ahead, Few Banks Likely to Tout Records of Funds' Predecessors

Article excerpt

A ruling permitting investment advisers to publicize track records of trust accounts even after they are converted to mutual funds has come too late for many banks, industry observers said.

The ruling by the Securities and Exchange Commission lifted restrictions that allowed investment managers to mention a converted account's past performance only in its prospectus, and only for the first year of the fund's life.

A handful of banks that launched proprietary mutual funds in the last few years - among them Bancorp Hawaii and U.S. Bancorp - are expected to take advantage of the decision.

But most industry observers interviewed last week said the new policy, spelled out last fall in a letter to the Massachusetts Mutual Life Insurance Co., will have limited impact.

"We looked at it but decided against it," said John L. Rudisill, senior vice president for mutual funds at First Security Corp., Salt Lake City.

Mr. Rudisill said the banking company's mutual funds, launched in late 1994, used a slightly more aggressive investment style than their trust predecessors.

That makes First Security ineligible to take advantage of the ruling, which allows investment advisers to promote the historical performance of a mutual fund only if the fund's investment objectives are virtually identical to those of its predecessor trust fund.

R. Gregory Knopf, managing director of Los Angeles-based Union Bank's Stepstone Mutual Funds, said his company, too, decided against applying the decision to its funds. …

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