Mutual funds give investors the opportunity to pool risk and take advantage of the knowledge and expertise of professional fund managers. Mutual fund companies pool the money of fund investors to develop a diversified portfolio of stocks and bonds. Some focus on specific markets sectors such as Asian companies or technology firms. Those who invest through a bank or buy into a mutual fund operated by a bank can sell shares and withdraw funds through the institution.
Bank Investment Advisers
Until the passage of the Gramm-Leach-Bliley Act of 1999, consumer banks didn't typically offer securities investments because of regulatory restrictions. Today customers can buy numerous investment products at their local bank branch or even by phone. Banks have essentially become brokerages. Investment advisers and branch managers can help bank customers purchase a broad variety of mutual funds and, of course, sell anything in their portfolio at any time.
Investors can ask their bank to issue them the money from the sale of mutual funds in cash, as a cashier's check or by depositing directly to their bank accounts. The ability to move money easily between a bank account and investments is one of the advantages to trading securities through a bank. Banks deduct transaction fees and commissions before settling mutual fund trades.
Bank Mutual Funds
Some banks issue their own mutual funds -- operated by their own experts and fund managers. An investor who purchases a bank's mutual fund doesn't have to be a bank customer and may purchase the mutual fund directly from the issuing bank or through another brokerage or investment firm. Investors with proof of ownership can request sale or liquidation of their mutual fund holdings directly from the issuing bank. When this happens, banks typically pay in cashier's checks after the deduction of fees and commissions.
According to the Securities and Exchange Commission, banks offer no more guarantee or assurance about an investment's performance than any other stock brokerage or investment firm. Federal Deposit Insurance Corp. (FDIC) backing of bank deposits does not apply to mutual funds and other investment products sold by banks. Investors can lose money in their mutual fund investments and banks are not liable.
- Bank of America: Merril Edge Mutual Funds
- "New York Times"; Bank Mutual Funds Get Joint Oversight; June 1995
- "Kiplinger's"; The 25 Best Mutual Funds; Andrew Tanzer; June 2007
- Provident Bank: Investor Services at Provident Bank
- Securities and Exchange Commission: Invest Wisely - An Introduction to Mutual Funds
- Federal Deopsit Insurance Corporation: Retail Investment Sales
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