Credit Suisse Asset Management said today that it will begin selling all of its no-load mutual funds as load products and will market them under one brand name, Credit Suisse Funds.
Twenty-eight funds will be affected by the decision, which goes into effect Dec. 12. Those products include the Warburg Pincus funds, which were merged into the Credit Suisse complex more than a year ago. That merger prompted the firm to name all of its funds under the Warburg Pincus brand. Now, all of those funds will be branded under Credit Suisse.
The move is part of an ongoing migration across the industry in which fund companies are identifying a demand for advice and are shifting from no-load to load in an effort to tap broker and adviser channels. In August, for example, GE Asset Management abandoned efforts to sell its 21 funds through Charles Schwabs no-load supermarket and began charging sales fees and distributing through advisers instead. Acorn Investment Trust also switched to load products in September of 2000. William Blair & Company did the same in October of 1999.
Perhaps one of the more notable defectors from the no-load arena was Zurich Scudder, which, almost a year ago, announced that it would stop offering no-load Scudder funds to investors and add loaded shares. The move was notable because of Scudders prominence in the no-load channel and for the fact that it embodied a sea change taking place in the industry, observers said.
Firms are also rethinking their strategies as dismal markets and investor unease have sparked an outflow of assets. Since January 2000, for example, Credit Suisse has posted net outflows of $2.3 billion, according to Financial Research Corporation of Boston. Investors pulled $917 billion from the firms funds last year and the leak worsened this year; as of November, investors had pulled $1.4 billion from Credit Suisse products in 2001 alone.
Shiv Mehta, who oversees product management at Credit Suisse, said the complex has been considering a change in strategy since the beginning of the year, including converting to a combination of load- and no-load vehicles. After deliberating with clients and advisers, the firm opted for a total load option because "it suits our investment style, global reach and broad product line," he said. "It really does focus us on growth."
But he said the move is not a defensive reaction aimed at stemming outflows. Rather, Mehta said the firms outflows have reflected broad marketplace trends where firms have ditched unfashionable investments styles prompting outflows from those funds. "When a style is out of favor, you tend to have large redemptions in a market like this," he said. "Were reflecting whats going on in the marketplace, which is pools of assets in places that are out of favor.
Mehta said all current investors will be grandfathered into the newly loaded products and will not have to pay the same fees new clients will. In addition, he said the firm is not worried about alienating potential clients who might seek primarily no-load vehicles because those clients are less likely to seek out Credit Suisse anyway.
"If you look at the actual flows in the no-load business, they have been going to a very concentrated list of fund families," Mehta said. "The investor may be looking for brand. Thats a marketing reaction. So, we see this as enlarging our footprint, not reducing our footprint . Well find out in dollar terms on Dec. 12."
