New Mutual Funds Reach out to Smaller Customers

Article excerpt

BOSTON -- The boom in U.S. mutual funds is grabbing the attention of money managers who for years focused on running accounts for pension funds -- and doing quite well at it. At least three money managers that oversee investments for schools, companies and states are starting up mutual funds to sell to smaller customers.

BEA Associates, Rosenberg Institutional Equity Management and Amerindo Investment Advisors Inc. are trying to cash in on one of American's fastest-growing businesses. Mutual fund assets have more than tripled to $3.3 trillion since the end of 1990.

"We all see where the growth in the business is going," said Paul Stamler, director of fund product development at BEA Associates in New York. "We've never really made an effort to make our investment expertise available to individual investors. We are now. Mutual funds are clearly the investment of choice." Chancellor LGT Asset Management Inc., a New York-based firm with $33 billion in assets that's owned by Liechtenstein Global Trust, said it may join its compatriots by introducing its first mutual funds next year. Investors may find these new funds attractive. By and large, pension fund managers have earned even better returns than mutual funds have in recent years. The Securities and Exchange Commission is aiding the sales efforts of these new funds by allowing fund managers to include information about their past performance managing private money in their mutual fund prospectuses. This is no problem so long as the information isn't presented in a "misleading way," said Robert Plaze, an associate director in the SEC's investment management division. In its prospectus for three funds, for instance, Rosenberg Institutional says its Barr Rosenberg U.S. Small Capitalization Fund rose at an annual rate of 21 percent in the five-year period ended Sept. 30. That puts it ahead of almost 90 percent of all small- company funds, according to statistics gathered by Morningstar Inc., a fund research group. The bulk of the record was compiled before Rosenberg sold shares in the fund to the public this summer, Morningstar said. Morningstar already gives this fund its highest rating. Similarly, the new Amerindo Technology Fund returned 34.2 percent to investors on average in the past five years, according to the Pensions Investments Performance Evaluation Report. This compares with the average gain of 15.7 percent for small-company growth funds in the same time, according to Morningstar. …


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