Magazine article American Banker

Bank-Run Funds Hold Their Own with Nonbanks' @sh#Growth/Income and Domestic Growth Outperform the Pack

Magazine article American Banker

Bank-Run Funds Hold Their Own with Nonbanks' @sh#Growth/Income and Domestic Growth Outperform the Pack

Article excerpt

Bank-run mutual funds have long been dogged by the perception that they cannot match the performance of their nonbank rivals.

But an analysis shows that on average, the returns of the 2,185 bank-run funds are actually running neck-and-neck with the 7,581 offered by nonbanks.

What's more, in two key categories-growth and income and domestic growth-the average performance of bank-run funds has topped that of nonbank funds over the last three-year and five-year periods, according to the research firm CDA Weisenberger, a sister company of American Banker.

Bank mutual fund executives felt vindicated by the findings.

"There has been an underappreciation of the quality of bank investment management for many, many years," said Jan Koenig, chief investment officer of Compass Bank Asset Management Group.

That perception grows out of the idea that bank funds are run more conservatively because bank customers are more conservative, and that banks cannot afford or do not want to pay for top portfolio managers.

But Mr. Koenig argues that while bank customers may allocate more of their money into conservative funds, the management of those funds is no less aggressive with regard to the funds' objectives.

As for banks' ability to attract talent, the proof is in the pudding, he said. When it comes to attracting talent, the most attention is paid to stock pickers, particularly for large-cap domestic funds, where the majority of equity assets are held, he said.

In the domestic-growth category, banks have the edge over the past three and five years, the CDA data shows. Bank funds returned 23.5% and 23% over the last three and five years, respectively, compared with 21% and 22% for nonbank funds. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.