The department was asked whether a mutual fund which is listed on a national securities exchange is an eligible investment for a mutual savings institution. The department answered the question in the negative for the following reason. There is a specific Banking Law provision dealing with investments in mutual funds, section 235(26)(e). Under it savings banks are authorized to invest in mutual funds only if such mutual funds are owned by savings banks or savings and loan associations and invest only in investments which are eligible for savings banks. This limitation was imposed because savings banks may only invest in certain types of common stock which meet certain quality standards, while mutual funds are not subject to such restrictions. To read section 235(26)(e) as anything other than exclusive would render that provision meaningless and authorize savings banks to do indirectly that which they can not do directly.

DATED: January 2, 1970