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Insurance company funds?
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January 15, 1997: 2:04 p.m. ET
A wide variety of companies are getting into the mutual fund business
From Correspondent William S. Rukeyser
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NEW YORK (CNNfn) -- Once upon a time, financial choices were simple. If you wanted a checking account, you went to a bank. If you wanted to insure your life or your property, you went to…or at least opened the door for, an insurance agent. If you wanted mutual fund shares, you called a broker or a fund company.
Now…well, it's a jumble out there.
"I think for a lot of us we look at it and we think, my goodness, 9000 or is it 10,000 funds, and the bank is going to sell me this and I've got insurance, they're going to sell me this…it's awfully confusing," said Jon Teall, of Lipper Analytical Services.
The explosion of investor interest in mutual funds has drawn a lot of new players. Among the largest are big banks and insurance companies. Nationwide, ITT Hartford and others have lately started offering conventional mutual funds as well as insurance products, like variable annuities, which may include mutual funds.
"We took the existing funds in our variable annuity funds -- (the ones) that were the most successful of all funds -- and we've cloned those to provide public mutual funds," said Peter Cummins, vice president of ITT Hartford Life Insurance.
In general, investment results don't depend on the sponsors' other businesses. Over the past one, five and ten years, mutual funds run by banks and insurance companies have provided annual returns within a percentage point or so of each other and of the average fund.
However, because they are sold through agents, brokers, banks, or financial planners, the new funds carry relatively high fees and sales charges.
"If the advice is worth it, you're willing to pay the load. If it's not worth it, then the load is too high," said Teall.
Decisions, decisions. Then again, nobody said getting rich was going to be easy.
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