The Bank of Bermuda's Institutional Money Fund reached the $2 billion mark in the middle of January, bank management revealed yesterday. The Aaa-rated fund only passed the $1 billion investment level four months ago.

Now fund managers are set to release a second class of share to permit smaller companies to invest in the fund.

"The fund aims to provide investors with a high level of current income, consistent with the preservation of capital and liquidity,'' said portfolio manager Faith Outerbridge. "The Aaa rating by Moody's Investor Services is the highest possible and attests to the low risk associated with this investment vehicle.'' Entry to the fund has until now been open to those with $5 million or more to invest, which has limited the fund's appeal to larger companies, mostly in the insurance industry. From February 1, Class B shares will be available to those willing to make an initial investment of just $100,000.

Senior vice president of investments at the bank, Wayne Chapman, said that with the new class of shares, "we have responded to a client need.'' He added: "We hope it won't be long before we are announcing our next Institutional Money Fund milestone.'' The fund is entirely invested in short-term instruments, with the bulk in Euro-commercial and other commercial paper. Thirty percent is invested in floating rate notes.

"The tremendous popularity of the fund is attributable to its consistent yield on a day-to-day basis, and to its daily dividend distribution policy,'' said Ms Outerbridge. "Daily dividends are extremely advantageous for clients who wish to segregate their income from principal for compliance and taxation considerations.'' Further information on the Bermuda Institutional Money Fund can be obtained by calling the bank's investment services sales team at 299-6200.

PORTFOLIO MANAGER -- Faith Outerbridge