month, which is intended to aid individuals who do not have extensive local investment portfolios.

Mr. W. Preston Hutchings, who returned to Bermuda in October 1993, is running the investment management subsidiary of the Bank of Butterfield, Butterfield Asset Management (BAM).

The new fund, to be called Buttress Bermuda Fund and managed by BAM, is intended to broaden investment opportunities for all Bermudians.

"For most people, who do not have a large amount of liquid assets, investment in Bermuda is difficult,'' he said.

The fund is expected to be significantly larger than the First Bermuda Securities' Rock Fund, and will consist of Bermuda company equities, and fixed income instruments issued by Bermuda companies, the Bermuda Government, and its agencies.

Fees will be lower than the Rock Fund by about 50-75 percent, said Mr.

Hutchings.

The minimum investment permitted will be $500. But, the bank is also setting up a facility whereby investors can have an investment, as small as $25 automatically deducted from their payroll.

"Mutual funds are a far more effective way of obtaining the diversification that investors need,'' said Mr. Hutchings.

"The trend over the last 18 months has been towards increased liquidity in the Bermuda market. We believe that trend will continue, but the transaction costs and the administrative burden of dealing in stocks has discouraged small investors,'' said Mr. Hutchings.

Describing the background affecting the formation of the fund, Mr. Hutchings said that local stocks have traditionally paid high current yields, and once exchange controls are lifted, interest rates should fall more in line with US rates, thus affecting local time deposits.

Local stocks have typically been undervalued on a price earnings basis, said Mr. Hutchings, who predicts that foreign investors will create a demand for local stock.

"The creation of a large fund should increase liquidity in the local exchange. As liquidity increases, prices will improve,'' he said.

"Bermudians have, for about 20 years, been handicapped by exchange controls and foreign currency purchase tax.

"We anticipate that the controls will be eased somewhat. Traditionally, Bermudians have invested in real estate, local stocks and time deposits -- these were the only ways to invest money.

"However, none of this market has been very liquid, and real estate and stocks have been closely linked.

"The easing of foreign currency purchase tax will allow Bermudians to invest overseas more readily. This will enable them to have sources of revenue in different areas of the world and in different types of markets that are much less correlated than the investments they currently have.

"Assuming exchange controls are eased in a meaningful manner, individuals will be able to get the benefits of diversification,'' he said. "It is our intention not only to provide diversification on an international basis, but on a local basis through this new mutual fund,'' he said.

MR. W. PRESTON HUTCHINGS -- He is running the Butterfield Asset Management.