One small fund group is moving against the trend of mutual fund companies to de-emphasize star portfolio managers.

The Forward Funds of San Francisco is hiring two prominent money managers in hopes of attracting attention and assets to the 17-month-old fund group. Shareholders are scheduled to vote next week on a proposal to have Elaine Garzarelli, the market analyst and money manager best known for predicting the 1987 stock market crash, serve as sub-adviser to the Forward Funds U.S. Equity Fund, according to a preliminary proxy statement the Forward Funds filed with the SEC Jan. 25.

In addition, the Forward Funds have proposed hiring Hansberger Global Investors of Fort Lauderdale, Fla. to serve as the new sub-adviser to the Forward Funds' International Equity Fund. Thomas Hansberger, the company president, is well known among institutional and high-net-worth investors for his international investing expertise.

In a step that will further highlight the new managers, Forward Funds plans to change the name of the two funds. The equity fund will become known as the Garzarelli U.S. Equity Fund if shareholders agree to hire her firm, according to SEC filings. The international fund will be renamed the Hansberger International Equity Fund.

Forward Funds and its investment adviser, Webster Investment Management Co. LLC of San Francisco, are proposing the changes in an effort to attract investors to the fund group. The Forward Funds, which began operations Sept. 30, 1998, have approximately $160 million in assets under management.

Webster is counting on Garzarelli's name recognition and her high visibility as a commentator for CBSMarket to increase the fund's profile, said Ronald Pelosi, president of Webster. A key reason for hiring Hansberger was that the Forward Funds could promote the Hansberger name, the Forward Funds said in the preliminary proxy statement. The International Equity Fund's current sub-adviser, Franklin Investment Counsel of Fort Lauderdale, Fla., has limited Forward's right to use the Templeton name for marketing purposes, according to the SEC filing.

The marketing issue is also important with Garzarelli. The fund's board of directors cited what it described as the potential enhanced marketability of the equity fund under Garzarelli's management as one reason for backing the change, in the proxy statement. Garzarelli's firm, Garzarelli Investment Management LLC of Irvine, Calif., has assets under management of approximately $3.4 million, according to the preliminary proxy statement. If shareholders agree, Garzarelli will replace the fund unit of Barclays Global Investors of San Francisco. Barclays has more than $750 billion in assets under management.

"We frankly don't have an advertising budget," Pelosi said. "We don't have any of the ability for mass marketing that (larger mutual fund companies) do."

Forward Funds' proposals run against the current trend. Mutual fund companies in recent years either have switched to team management of their funds or de-emphasized the role of star portfolio managers. Those moves are defensive, intended to limit the damage if the star leaves for another mutual fund or hedge fund, according to fund executives and consultants.

The trend has been to "downgrade the personality, upgrade the team," said Burton J. Greenwald, a mutual fund consultant in Philadelphia. "It's to avoid the horrendous situation when the all-star decides to pull up stakes and go elsewhere."

Webster is aware of the risk that one of their managers could end the relationship, said Pelosi. The Forward Funds' board of directors also is prepared to change sub-advisers if the new managers' investment returns are not competitive with their peers over time, Pelosi said.

In Garzarelli's case, as well as to take advantage of her name recognition, Webster hopes to find a market for the fund among investors who subscribe to Garzarelli's newsletter, Pelosi said. Webster has purchased a 49 percent stake in Garzarelli's firm for what Pelosi described as a nominal price. Greenwald expressed skepticism that Garzarelli's name will generate a wave of sales. But Forward Funds' efforts demonstrate the difficulties small funds with little-known brand names and no long-term investment track records face in a crowded market Greenwald said.

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