Bank Mutual Fund - Low Risk or Low Profit?

In the Types of mutual funds page I did not even mention about the Bank Mutual Funds. Why, shouldn't you know more about them? Actually I omitted them only because they are not really another type of mutual fund.

Any Type Of Mutual Fund Can Be Offered By Bank

In theory nothing stops the bank mutual funds from investing in everything, taking all kind of strategies, being Index Funds, Unit Investment Trusts or even Funds on Funds.

The Bank Mutual Funds are just investment funds managed and offered by banks.

There is nothing so special about them except that you'll go to the bank office instead of some other building. Still, people like to think about them like they were another kind of investment activity.

The truth is that there are some common specifics which are not mandatory, but usually are valid for the Bank Mutual Funds. They have some positives and negatives:

Bank Mutual Fund Advantages

Lower risk. The reason investors trust more in the bank mutual funds is that they are managed by respected banks. The banks, are pretty serious about what they do and avoid doing risky things. That's why the bank mutual funds are usually lower risks than the average fund you could find on the market. However some people think the bank mutual fund is risk free. This is not true. Even the banks can bankrupt

Lower fees. Usually you can sell and buy fund shares directly from your bank account without paying fees. This is maybe not a big deal, but is definitely an advantage

Better service. This is not a rule, but in most cases you can get better and faster customer service when working with banks. The banks business is in serving their customers and the good banks know how to do that

Bank Mutual Fund Disadvantages

Too conservative. Again, this is not a rule. Nothing really stops the banks from creating aggressive mutual funds. But most of them avoid doing it. Producing big losses would have too strong impact on the bank's reputation. The banks don't want to lose their customers because of one failed venture. That's why their mutual funds are usually from balanced to conservative

Not FDIC insured. The mutual funds are not bank deposits and are not insured in any way. Don't think that being offered from banks makes them as secure as the deposits.

Where to find Bank Mutual Funds?

The places to search for bank mutual funds do not differ too much from the places where you can find any other mutual funds. Like described here, you can research the Web with your favourite search engine. But I first recommend checking at your local banks as investing in such funds will be esier to maintnain for you.

The banks usually have large branch networks which makes it easier to visit a local representative even if you live in a smaller town. The other companies which offer mutual funds usually have their front offices only in the big cities (unless you can buy/sell their shares remotely via Internet).

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