A new survey by discount brokerage Charles Schwab has found that there may be a greater taste for online mutual fund trading than was previously thought.

Many no-load mutual funds have been developing their websites and allowing their customers to trade funds online. But few have created full-scale Internet operations like Fidelity and Vanguard. Those companies allow online mutual fund trading and also have created online brokerages and fund supermarkets, catering to the appetites of Web-savvy investors who want easy access to a range of mutual funds.

According to a recent Schwab survey of its own customers, 92 percent of the 625 respondents plan to make online mutual fund trades within the next six months.

Schwab is known for its use of the Internet, and the increase in Internet trading on its site has been dramatic. At the beginning of 1997, only five percent of all mutual fund trades at Schwab were executed online. But now, 50 percent of the company's fund trades are.

Based on current trends, Schwab expects that 70 percent or 80 percent of all mutual fund trades will be conducted online in the near future, according to Greg Gable, a Schwab spokesperson. Over the last year, online trading of mutual funds has more than doubled, although Gable does not expect that pace of change to continue.

Schwab officials believe that what drives stock pickers to the Internet and mutual fund investors online are not the same, Gable said. Except in the case of a small group of funds, there is no financial incentive to trade mutual funds online as there is for stocks, which trade with lower commissions online. Schwab has concluded that convenience and breadth of information is bringing mutual fund business to the Internet, not relatively low commissions, said Gable.

The results of the Schwab survey are surprising when compared to other studies done on online mutual fund trading. In December of last year, American Century Investments of Kansas City, Mo. released a study that said that mutual fund investors were reluctant to trade online due to security concerns. The company found that only nine percent of respondents had bought or sold fund shares over the Internet. However, 46 percent of the respondents said they had at least visited a mutual fund Web site.

Schwab officials did say, however, that their survey was biased toward Internet savvy investors. The company conducted the survey by e-mail, so all of the respondents were at least familiar with the Internet, Gable said.

Nevertheless, mutual fund companies seem to be increasingly committed to adapting to investors' desire to trade mutual funds over the Internet. The most dramatic and recent example of this determination has been direct-seller Scudder Investments of Boston, which recently closed its walk-in offices and consolidated its phone operations as a prelude to an increased emphasis on its Internet business.

"The direct business is changing dramatically)," said Steven Shapiro, vice president of corporate communications at Scudder. "The true direct consumer is not one that walks into (a retail office.)"

Scudder closed retail offices in Boston, New York, Boca Raton, Fla., San Francisco, Calif. and Chicago and laid off over 100 employees. It moved all of its Boston phone operations to Norwell, Mass. and closed down its retail phone operations in Salem, Mass. Now all of its retail investors are being served by telephone from Norwell and San Diego, Calif. Retirement services phone operations are still being run out of Salem. Scudder made the changes to focus solely on its phone and Internet customer service.

Scudder is aiming to make its Web site "100 percent self service," so that an investor can buy, sell or trade funds by either phone or Internet, Shapiro said.

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