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Life Health > Annuities > Variable Annuities

Banks Report $2.3 Billion In January Fund Sales

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NU Online News Service, March 26, 2003, 1:37 p.m. EST – U.S. bank and savings institution branches generated $2.3 billion in sales of long-term mutual funds in January, according to Kenneth Kehrer Associates, Princeton, N.J.

Sales were down 25% from January 2002, but they were up more than 20% from December 2002.

Lynn Niedermeier, president of Invest Financial Corp., Tampa, Fla., the company that sponsors the survey, prefers to focus on the improvement the bank branches have reported since late 2002.

“Bank mutual fund sales in January were the best since October,” Niedermeier says.

Kehrer sees another reason for optimism: bank mutual fund sales grew twice as fast between December 2002 and January as bank variable annuity sales, suggesting that consumers were willing to accept a little more market risk in January than they were willing to accept the previous month.

Mutual funds tend to be more aggressive investments than variable annuities, because mutual funds usually expose investors to the full effect of drops in stock and bond prices. Variable annuities often come with guarantees that provide some protection against market downturns.

Banks attracted $2.22 to long-term mutual funds in January for every $1 they attracted to variable annuities, up from a $1.94-to-$1 ratio in December 2002, Kehrer says.

But other Kehrer survey results paint a gloomier picture.

The 25% decline in sales between January 2002 and January 2003 is more than twice as big as the 12% decline in sales that occurred between the fourth quarter of 2001 and the fourth quarter of 2002.


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