While many U.S. fund companies have long had offshore funds, it appears that several fund companies believe that now is an opportune moment to expand their offshore assets under management. Putnam recently added to its Cayman Islands offshore fund family and Janus recently started its own operation in Dublin, Ireland.
"My belief is that outside the U.S. - both in the offshore haven and in the in-country (operations) - the growth rates will surpass those in the U.S.," said Mike Wilson senior vice president of the international/offshore global investor services group for State Street Corp. His remarks were made at the Investment Company Institute's Operations Conference last week.
Janus is creating a family of 12 offshore funds based in Dublin, with seven being introduced now. They will be clones of existing Janus funds managed in the U.S., says Richard Garland, a newly appointed director of international marketing for Janus. Garland said that Janus, which has just over $60 billion in mutual fund assets under management, is looking abroad because its strong growth domestically gives it a good foundation to venture overseas and because of opportunities abroad.
"Janus has had phenomenal growth in the past five years," Garland said. "The U.S. mutual fund growth has exploded."
He said the offshore market appears promising and that no one fund company is dominating distribution.
"The (offshore) appetite for mutual funds is just beginning," Garland said. "This is still early in the cycle."
The offshore funds are sold through financial intermediaries. Garland says that the offshore mutual fund market mirrors that of the U.S. market 10 to 15 years ago. Accordingly, it is too early to launch no-load offshore funds.
"The market's not developed enough, investors need advice," he says.
Putnam introduced five new funds to its Cayman fund group in October, bringing that fund family to 17 funds. It has offered the funds since 1996 and last added more funds in September of 1997. The new funds are the George Putnam Fund, Putnam Europe Growth Fund, Putnam High Yield Fund, Putnam Investors Fund and Putnam Emerging Information Sciences Fund. All are modeled on U.S.-based funds, except the information sciences fund, which is modeled on a Luxembourg-based institutional fund.
"They give international investors a range of options that Putnam investors in the United States have enjoyed," said Steven Spiegel, head of corporate and international development for Putnam.