American Express Financial Corp. is not done beefing up its mutual fund product line. Last year, the firm launched six sub-advised funds under the newly created AXP Partners brand, an internally managed fund, a donor-advised fund, and a 529 partnership. It filed late last year for three additional internally managed funds and two sub-advised funds that it plans to launch in February and March of this year. Still, the firm is planning to create between two and four additional sub-advised funds and an undetermined amount of internally managed funds that are expected to launch in the second half of 2002. More are expected in 2003, said Paul Johnson, a spokesman for American Express Funds.
The sudden spate of activity began last year after the firm conducted a review of its product line, Johnson said. Executives found that the percentage of proprietary funds that AmEx's own financial advisers were selling had dropped. They concluded the firm would need to include more funds throughout the nine style boxes with clear differentiation between products, Johnson said. Currently, about 45% of the funds sold by AmEx financial advisers are AmEx funds.
"We're trying to get that up to between 60% and 70%," Johnson said.
The AmEx funds had been predominantly large-cap products and skewed to the growth end of the spectrum. In 2000, the firm lured Warren Spitz away from Prudential to internally manage several value funds, and last year it hired sub-advisors to manage others, including two international funds. It is not clear how many value and growth funds the firm will create for 2002 and 2003.
So far, AmEx has hired a handful of sub-advisers for its AXP Partners series including: RS Investment Management, Neuberger Berman, INVESCO, Lord, Abbott, Davis Selected Advisers, EQSF Advisers, Royce & Assoc., American Century, Liberty Wagner, Alliance Capital, Gabelli, Pilgrim Baxter and Wellington.
Last week, the AmEx funds expanded its relationship with Gabelli, Pilgrim Baxter and Wellington. The company filed a proxy with the Securities and Exchange Commission last Tuesday to convert two funds from internal management to sub-advisory management because they had been under-performing for an extended period, Johnson said. The $247 million AXP Discovery fund, a mid-cap growth product, ranks 91% in its category for five-year returns and 93% for 10-year returns, including ranking 100% in 1999, according to Morningstar. Gabelli, Pilgrim Baxter and Wellington will now co-manage that fund. The $200 million AXP Progressive fund, mid-cap blend product, ranks 96% in its category for five-year returns and 87% for 10-year returns, and ranked 96% in 1999.
AmEx's new product offerings have been supported by a new marketing campaign, Johnson said. When the firm launched its sub-advised funds and introduced the AXP Partners brand, it also reintroduced its existing funds. The firm now has 53 products.
"We've really been proactive in our marketing effort," Johnson said. "We're pushing our new products, our existing products and making it clear to our advisers that we're making a real effort to give them as much choice as possible."
The marketing effort has included developing new sales literature and CD ROM with product information, presenting at road shows and making calls to organization leaders. In 2001, the six new Partners funds drew in $700 million.