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- W265200472 abstract "Most of what can be said about the rapid growth of mutual funds has been said. Total assets of all mutual funds have passed the $2 trillion mark and, barring a turnaround on Wall Street, could match or even exceed total commercial bank deposits by the end of 1994. Banks are playing a part in this remarkable market phenomenon. Some 3,500 banks sell mutual funds, and it's been estimated that 15-20% of sales today are handled through The growing involvement of banks in this market shouldn't surprise anyone. Low interest rates are driving bank customers to seek higher returns than those offered by CDs, and it's logical that banks would offer these products to keep their customers at the bank. The advantages of convenience, investment advice, and performance further help to make bank mutual funds a very attractive investment alternative. Naturally, our growing role in mutual funds has attracted attention from Washington. But even without that added scrutiny, it's incumbent for us as bankers to ask ourselves: How much do our mutual-fund customers really know about the uninsured investments they are making through our banks? How confident can we be, for example, that every one of our mutual-fund customers understands that these investments are not FDIC-insured? How of our customers understand that mutual funds are not an obligation of, or guaranteed by, the bank? And how know that the funds involve investment risk, including the possible loss of principal? When the stock market corrects, will our customers be sophisticated enough to understand that the value of mutual-fund investments rises and falls with the market? Or will they line up at the front door with tar and feathers in hand? A survey by the Securities and Exchange Commission in November found that one-in-five holders of mutual funds believe that funds sold through banks are federally insured. The SEC also found that two-in-five holders of mutual funds (39%) believe mutual funds purchased from a stockholder are federally insured. Obviously, some people are confused. At ABA's annual convention in San Diego, the Comptroller of the Currency Eugene Ludwig, warned that many consumers still do not understand that they can lose money on mutual funds that they buy from commercial banks. I believe we can make full voluntary consumer disclosure a win-win situation for our customers and the industry. …" @default.
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- W265200472 date "1994-02-01" @default.
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- W265200472 title "Two Trillion and Counting" @default.
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