Mercantile revamps mutual funds

Changes are to allow consumers easier access

October 26, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Mercantile Bankshares Corp. has revamped its 14 mutual funds as part of a broader plan to expand its investment and wealth-management business.

The funds, which began in 1989, were tailored and marketed to institutional investors, such as employee-benefit plans and charitable organizations. Consumers could buy into the funds with a minimum $25,000 investment.

Consumers can now buy into Mercantile's three money market funds, five bond funds, and six equity funds with a minimum investment of $1,000, a common threshold for funds.

Known for its conservative approach, Mercantile enters the retail market for mutual funds during an uncertain time in the stock market and will compete with other area banks and brokerages that offer mutual funds.

The Baltimore-based bank is targeting current and prospective customers throughout the bank's mid-Atlantic region markets, a top bank official said. The bank will sell the funds through its network of 20 bank affiliates with a combined 183 branches across Maryland, Delaware, Pennsylvania, Washington and Virginia.

"This isn't a fad strategy," said John J. Pileggi, president of Mercantile Funds Inc., a bank subsidiary. "The investments that the bank is making in the wealth and management area are substantial. ... This is an attempt to capitalize on the bank's strength of its brand and the value of its franchise."

Pileggi said that "the idea is to provide these funds as another investment vehicle" for our customers. He declined to say how much the bank was spending on the move.

Mercantile will use its employees and more-experienced financial advisers to sell the mutual funds, he said.

"In the past, they never tried to appeal to all the branch customers by making their mutual funds accessible," said Claire M. Percarpio, a banking analyst with Janney Montgomery Scott LLC in Philadelphia. "They now have a product ... for the retail side that they did not have before."

Consumers aren't able to buy fund shares online, but the bank provides daily prices, yields, performance and other information. The funds include A, B, and C class shares, which involve varying levels of costs or fees for the consumer.

Formerly known as M.S.D.&T. Funds, the funds have been renamed the Mercantile Funds. Fund assets under management are $2.4 billion. The bank's combined assets total $10 billion.

Shares of Mercantile, which trade on Nasdaq, rose $1.02 yesterday to close at $39.49.

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