Magazine article American Banker

Banks' Small-Company Growth Funds Churn out Big Returns

Magazine article American Banker

Banks' Small-Company Growth Funds Churn out Big Returns

Article excerpt

To get big performance out of a mutual fund, sometimes you have to go small.

During the first quarter, the average bank-managed mutual fund that specializes in small-company growth stocks returned 5.82%, according to data provided by CDA/Wiesenberger, Rockville, Md.

That's just short of the 6.05% return at the average nonbank fund in the same category. But both handily beat the 4.55% of the S&P 500, a common benchmark for large-company funds.

Though bank investors have traditionally preferred basic bond and stock funds, small-company equity funds promise to boost overall investment returns when used as part of a diversified portfolio.

The trick for bankers is translating that historical lesson into new mutual fund assets.

PNC Bank Corp., for one, is eager to do that. The Pittsburgh-based banking company's Compass Capital Small Capitalization Growth fund led the pack of 119 bank-managed small-company growth funds, with a 12.82% return for quarter.

"We have a lot to be proud of, and now we have to let people know about it," said Karen H. Sabath, president of Compass Capital Management, PNC's New York-based asset management unit.

Compass Capital has three institutional salespeople, or wholesalers, spreading the word to brokers who actually sell the funds to consumers. And Ms. Sabath plans to have hired three more by the end of June.

So far the small-cap fund has been available to retail investors only through PNC's brokerage. …

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