Magazine article American Banker

Banks Add Global Funds to Equity Menu

Magazine article American Banker

Banks Add Global Funds to Equity Menu

Article excerpt

In the name of diversity, banks are rushing to add international mutual funds to their equity buffet tables.

And while international funds are not exactly the most coveted of menu items, bankers say the funds would take off if overseas markets become hot and U.S. stocks slow down.

Those banks already in the international business believe they are best positioned to take advantage of such events.

It hasn't gone unnoticed in the banking community that foreign stock markets account for two-thirds of the trading volume in the world.

"There's a tremendous interest on all investors' part in diversifying globally. Banks are just trying to get in front of that," said George Mullen, senior vice president of marketing for Fiduciary Trust Co. in New York.

Assets of $114 Million

Fiduciary manages two FT Series funds, International Equity Class A and C for the Federated fund group in Pittsburgh. The funds have $114 million in assets combined.

Of the 43 bank-related international equity funds tracked by Lipper Analytical Services Inc., 32 have been introduced since 1990. Recent offerings by LaSalle National Trust, which wheeled out four international Rembrandt funds this year, and the Boston Co.'s Institutional fund are but a few examples of the trend.

Total assets in these funds are relatively small -- $2.5 billion. And not all of these funds are managed or sold by banks. Seven of the names on the Lipper list have tangential relationships to banks.

For example, Lipper lists any fund associated with a bank in any way, such as the $943 million Vanguard World: International Growth fund. Vanguard is a no-load fund group that doesn't sell through banks, but the fund's advisor, Shroder Capital Management International Inc., is a bank.

|A Nice Balance'

Bankers aren't claiming that offering international funds will be big business.

"We're not suggesting people go crazy. It just adds a nice balance to a person's portfolio," said LaSalle's senior vice president of marketing, Paul Kampner.

"To ignore international markets is to ignore a large portion of the world's capital and I don't think investors can afford to do that. Our view is a world view and a properly structured portfolio should have international exposure," Mr. Kampner added.

Most of the bank-owned or managed funds grew out of foreign operations of large banks. To wit: LaSalle is owned by ABN Ambro, the $242 billion Dutch bank with 1,800 offices worldwide. The 16 Rembrandt funds debuted this year with $1 billion from ABN's trust operations. Because the bank has been managing assets worldwide for 125 years, Mr. Kampner said it was simple to "clone" an existing fund-management system.

Mr. …

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