You could say the message of Columbia Management's new advertising campaign showcasing its top-performing funds is: When the going gets tough, the tough get going-into well-researched, strategically positioned mutual funds.
The campaign, which debuted March 9, is a switch for Columbia, which in the fall ran ads stressing the depth and breadth of its offerings and its commitment to excellence. This also is Columbia's first major advertising push since Ameriprise Financial acquired it from Bank of America in May 2010 for $1 billion in cash.
"We've chosen to showcase a few of our many top-performing funds to emphasize the quality in our mutual fund lineup," said Christopher Thompson, head of product and marketing at Columbia Management. "Investors and financial advisers are aware that Columbia Management is one of the nation's largest asset managers. In fact, we are the seventh largest. We feel now is the time to highlight some of our strong-performing retail mutual funds and institutional offerings."
Online advertisements, which are targeting both advisers and investors, will appear into early 2012 on the website of Financial Planning (a SourceMedia property, like Money Management Executive) as well as Investment News, AdvisorOne, Financial Times, Barron's, Morningstar, Bloomberg, Seeking Alpha, Institutional Investors, Pensions & Investments and Plan Sponsor.
Print ads will appear in Barron's, Investment News and Pensions & Investments.
The ads will cover five investment themes Columbia expects to do well in a protracted, sluggish and turbulent recovery-as long as they are well-researched, expertly managed and employ bottom-up securities selection, Thompson said.
These are: income-oriented equity, growth-oriented companies, municipal bonds, short-term credit in the fixed income market and absolute return. Columbia will be launching a suite of absolute return, multi-strategy funds in early April.
"We certainly believe that fund selection is critical now, the same way that security selection-based on deep, fundamental research-is so important," Thompson said. "Investors should focus on firms with proven track records, long-tenured teams and deep research capabilities."
The first ad features the Columbia Dividend Income Fund, which Morningstar has rated as a five-star fund and the firm is touting as an attractive investment in this slow-growth economy. A second ad features the two-star Columbia Select Large Cap Growth Fund and the four-star Columbia Mid Cap Growth Fund, telling investors that these are smart choices since growth opportunities are scarce.
Ads covering the other three investment themes have yet to be developed.
In a recent market commentary, Columbia Management Chief Market Strategist David Joy said that while the recovery phase of the economy has ended, the expansion that has begun is modest at best.
"For all of 2010, the U.S. economy grew at a rate of 2.8%, after contracting 2.8% in 2009," Joy said. In the fourth quarter of 2010, however, "the U.S. economy grew at a slower pace than first estimated-2.8% rather than the 3.2% advance estimate.
"Contributing to the lower total were smaller contributions from inventory accumulation, consumer spending and expenditures by state and local governments.
"The state and local government component of the GDP can be expected to shrink further as fiscal strains linger, and the federal sector will shrink as well, as Congress wrestles with a 10% budgetary shortfall of its own," Joy said.
As the public sector's contribution to overall GDP declines, it is even more important that the private sector continue its own recovery, Joy said. But consumers are facing the same headwinds that state and local governments face, he noted.
Thus, while the economy is on the mend, Joy believes strongly that the recovery will be slow.
This is precisely why the Columbia ads are focusing on the five investment themes the firm thinks will serve investors well, Thompson said.
The Columbia Dividend Income Fund, a large value fund, returned 12.66% over the trailing year ended March 9, 2011, 4.17% over the trailing five years and 4.49% over the trailing 10 years.
The fund seeks to deliver competitive risk-adjusted performance over time by investing in companies with a history of paying higher than average dividends and by focusing on strong free cash flows.
As of Jan. 31, 2011 its five top holdings were Exxon Mobil, AT&T, International Business Machines, Verizon Communications and Phillip Morris.
The portfolio management team of the Columbia Dividend Income Fund, in their 2010 annual report to shareholders, noted, "We believe economic growth will proceed at a snail's pace as countries and companies throughout the world strive to contain debt. With the public skittish about reentering the stock market, dividends could be an attractive incentive now that many corporate dividends exceed the yields on bonds of the same issuers."
The Columbia Select Large Cap Growth Fund returned 24.06% over the trailing year ended March 9, 2011, 5.63% over the trailing five years and -1.13% over the trailing 10 years.
That fund seeks long-term capital appreciation. As of Jan. 31, 2011, its five top holdings were Baidu (a Chinese web services company), EOG Resources (an oil and gas company), Apple, Precision Castparts (an industrial goods and metal fabrication company) and Amazon.
In its 2010 shareholder annual report, the fund managers said that even in a low-growth world, they were confident that they could continue to find companies that are gaining market share, whose markets are growing and that can benefit from product cycles rather than economic cycles.
"A peek at our portfolio provides some perspective as to where we are seeing the best growth opportunities across a variety of sectors such as technology, health care, consumer and financials," the portfolio managers said.
The Columbia Mid Cap Growth Fund has returned 29.53% in the trailing year ended Feb. 28, 2011, 6.80% in the trailing three years, and 2.92% in the trailing 10 years. As of Jan. 31, 2011, its five top holdings were Cummins (a power generation equipment manufacturer), Cliffs National Resources (an international mining and natural resources company), CF Industries Holdings (a fertilizer manufacturer), Atmel (a semiconductor integrated circuits manufacturer) and Red Hat (an open-source platform that supports a broad range of applications).
In its 2010 annual shareholder report, the portfolio management team said, "With unemployment remaining stubbornly high and continued de-leveraging in the wake of the housing bubble bursting, we have positioned the portfolio for a gradual economic recovery, and continue to seek those scarce growth companies that have products or services that are in demand in the marketplace and can consistently grow regardless of the direction or pace of the economy."