Is it a good idea to buy mutual funds from banks?

By Yolander Prinzel AAA
A:

Mutual funds offer consumers a great way to access a professionally-managed group of assets at a relatively low cost, with reasonable annual expenses. Mutual funds can be purchased in any investment account, such as an IRA, which can be opened with many different financial institutions, including banks.

Banks don't generally specialize in investing since they are more about savings, day-to-day financial transactions and loans. That means that a bank might have a more limited pool of mutual fund families - multiple funds managed by the same company - for their customers to choose from.

Also, not every mutual fund is the same as another. This makes it important to have a wide variety of funds to choose from, which could be an issue depending on your bank. For example, mutual funds can be tailored to many different priorities and investment styles; some are "green," meaning that the underlying investments are ecologically-friendly companies and inventions, some have no fees and so on.

On the other hand, a bank may have lower account balance requirements than a brokerage firm, making investing a real possibility for more individuals. In some instances, a brokerage firm may have a satellite branch in a bank, allowing customers a full range of mutual fund families and other investments within their favorite branch.

RELATED FAQS

  1. What are the best ways to lower my investing fees?

    Lower your investing fees by buying index funds or ETFs, choosing the right mutual fund share class, evaluating breakpoints ...
  2. What is the difference between a 401(k) plan and a 403(b) plan?

    Administered by for-profit, private companies, 401(k) plans are more common than the nonprofit or government-sponsored 4 ...
  3. What do the different types of mutual fund classes mean?

    When checking for different quotes on mutual funds, you might see different prices for classes of mutual fund shares that ...
  4. Do ETFs have a board of directors?

    Yes. An exchange-traded fund (ETF) is a type of security that tracks a basket of assets or an index (such as an index fund), ...
RELATED TERMS
  1. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  2. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  3. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  4. Product Portfolio

    Investopedia explains: A Product Portfolio is the collection ...
  5. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  6. Target-Date Fund

    A mutual fund in the hybrid category that automatically resets ...
comments powered by Disqus
Related Articles
  1. Understanding The Bond Behemoth That ...
    Mutual Funds & ETFs

    Understanding The Bond Behemoth That ...

  2. Alternatives To Pimco's Total Return ...
    Bonds & Fixed Income

    Alternatives To Pimco's Total Return ...

  3. Pimco Investor? Consider This Before ...
    Investing News

    Pimco Investor? Consider This Before ...

  4. Cut Your Tax Bill With Donor-Advised ...
    Taxes

    Cut Your Tax Bill With Donor-Advised ...

  5. Can High Fund Returns Be Deceiving?
    Mutual Funds & ETFs

    Can High Fund Returns Be Deceiving?

Trading Center