For the Love of the Game : My Story
by Michael Jordan
New Black-Owned Investment
Fund Unveiled
NEW YORK-Just before the July 4 weekend, the nations' fifth largest Black commercial bank, Liberty Trust & Bank, announced the opening of its first mutual fund. The Liberty Freedom Fund.Alden J. McDonald. Jr.. president and chief executive officer explained the significance of the fund. "The significance of our opening the Liberty Freedom Fund is threefold: We are the only African American bank in the country to own a mutual fund: it is the only mutual fund to he owned, managed. and distributed by African Americans and we will solicit the non-traditional investor, to further educate the African American community to grow the wealth, to yield significant returns (profits) in the equity market place (stock market)."
A mutual fund invests in a portfolio that combines different securities such as stocks, bonds, money market securities in a single investment pool. In other words instead of investing in one single company, where the risk of loss is greater, the investment is spread over many companies, therefore minimizing the risk. Mutual funds take away the risk of putting all of an investor's eggs in one basket.
Carol Davis. spokesperson for the Coalition of Black Investors, said mutual funds are considered a safe investment, if handled by a professional, experienced money manager who is responsible for the purchase and sale of securities, and developing and implementing the fund's investment strategy. Many potential investors like having an investment manager research and pick their investments.
The Liberty Freedom Fund is a "large cap fund." meaning the new fund will invest mostly in Fortune 500 companies-large, profitable and stable corporations--and again make for considerably smaller risks for potential investors.
Liberty Bank & Trust has been developing this concept for the last three to four years, said Mr. McDonald. "We saw a significant number of African Americans not investing simply because of a lack of understanding." he said.
"Sadly. African Americans do have a low savings rate when compared to other groups in this country. But I believe that as more African Americans become more aware of the opportunities that exist through mutual funds, there'll be an increase in savings and investment," said Ms. Davis. "So the more we understand about mutual funds and the stock market, the more of us will jump in."
Mutual funds have also become very popular as a result of dramatic growth in 401(k) retirement plans. According to the Investment Company Institute, a mutual fund research firm in Washington. D.C., mutual funds totaling $2 trillion dollars in 1993 grew to almost $4.5 trillion dollars by the end of 1997.
Wall Street analysts anticipate total mutual funds to surpass bank assets, which reflects a change in the way people generally save their money, while simultaneously displaying a strong confidence in a booming stock market.
As a result, it has become necessary for Black banks to establish new investment strategies for their depositors.
"Traditionally Black banks have offered loans, checking and saving accounts--but as more depositors seek higher returns on their money they'll withdraw funds out of the Black bank to invest in mutual funds offered elsewhere. Therefore Black banks need to develop investment strategics for their depositors who are missing out on mutual funds." stated Ms. Davis, of the Coalition of Black Investors.
"The launching of the Liberty Freedom Fund by Liberty Bank & Trust is another example of how Black banks are generating the type of products that will enhance the future competitiveness of African American financial institutions" said Alfred Elmond Jr. vice president and executive editor of Black Enterprise.
Those interested in a prospectus should call 1 800-645-1704.
-Charles Brooks
Source: The Final Call
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