Fred Alger Management of New York has launched a print advertising campaign in business and investment publications that touts the performance of three of its flagship growth funds. The ads, slated to run through the end of the year, attribute the funds' stellar performance to the firm's 40-year-old foolproof investment philosophy of using a bottom-up approach to identify the fastest-growing companies in their respective sectors. Alger has $9 billion in assets under management.
The ads, which debuted last week in Barron's, USA Today and The Wall Street Journal, emphasize the one-, three- and five-year performance of the Alger LargeCap Growth Fund, the Alger MidCap Growth Fund and the Alger SmallCap Growth Fund. Without giving the funds' actual performance numbers but their relative peer rankings, instead, the ads note that in the 12 months through Sept. 30, as well as over the past three years, each of the growth funds performed in the top quartile of their peer group, according to Lipper of New York. In the five years ended through Sept. 30, the Alger LargeCap Growth Fund and the Alger MidCap Growth Fund both made the top quartile, but the Alger SmallCap Growth Fund ranked in the third quartile, the ads show.
In the past year, for example, the ads indicate that the Alger SmallCap Growth Fund was the fourth best-performing fund out of 522 peer funds. The Alger MidCap Growth Fund ranked 83rd out of 541 peer funds, and the Alger LargeCap Growth Fund was 25th out of 678 peer funds. In the past three years, the Alger LargeCap Growth Fund ranked 58th out of 577 funds, Alger MidCap Growth came in at 66 out of 441 funds, and Alger SmallCap Growth ranked 58th out of 436 funds.
Two of the ads, headlined "An Uncanny Knack for Finding Growth," concentrate solely on these returns, while the third, titled "The Very Latest Results of a 40-Year-Old Investment Philosophy," expands on the rankings to emphasize the firm's investment philosophy. Copy in this ad reads, "Find dynamic companies undergoing change, and you will find investment opportunities. For more than four decades, these have been the watchwords of Alger analysts and portfolio managers. It's a proven process that can yield rare opportunities others might miss." At the end of the ad, it states that Alger "invests in dynamic change."
"We are not only trying to emphasize our performance results - that's only part of it - we are also trying to convey our investment approach," said Zachary Karabell, senior vice president and the coordinator of the ads. He added that Fred Alger is attempting to trademark its investment philosophy through this new campaign.
Since 1964, as Fred Alger states on its Web site, the firm has sought to invest in pure-growth companies because it believes they "provide the best long-term investment opportunities."
Specifically, Alger looks to invest in firms, ahead of the market, with strong management teams that offer greater potential for earnings growth and the ability to sustain it because they offer goods and services to a fast-growing market or are going through a major lifecycle change. Using proprietary financial models, Alger's portfolio managers and analysts then pick apart balance sheets on more than 1,000 companies to project future earnings by studying: unit volume growth, revenue growth, profit margins, earnings projections and rates of earnings growth. They also investigate a firm's competitive strengths, product dominance and market niche.
"Our adherence to pure-growth investing based on in-depth research has been constant throughout our history and continues to guide our investing approach today," according to Alger. "Our goal is to find rapidly growing companies in all sectors of the market, in all industries and in any capitalization size."
Investors may not be aware of this kind of detailed, in-depth research that Fred Alger conducts, or of its solid track record, Karabell said. "We believe the marketplace was not aware of our performance history, and this is a good way to inform clients of what we have been doing in the past few years," he said. Karabell attributes the strong results of Fred Alger's flagship growth funds to the fact that the firm has a "unique, distinctive and unusual investment philosophy."
Thus, the new campaign attempts to showcase Fred Alger's investment style and relative rankings both for current and potential investors, as well as brokers, in the hope that these investment professionals will recommend Alger funds to investors.
The ads will also appear in Business Week, Smart Money, Investment News, Registered Rep and Kiplinger's.
New York-based Margeotes-FertittaPowell created Alger's current campaign and also designed ads for the launch of the Alger China-U.S. Growth Fund back in 2004.
"We do not have a lot of advertising history," Karabell noted. However in 2004, when the firm launched the China-U.S. Growth Fund, Fred Alger first hired MargeotesFertittaPowell to design ads targeting existing and potential clients. The ads emphasized that betting on China's new wave of prosperity was timely, due to its huge trade surplus, Internet growth and increase in some stock values of as much as 1,000%. MargeotesFertittaPowell has served a few other financial services companies, including Goldman Sachs and the New York Stock Exchange, as well as packaged-goods companies.
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