Resurgence in international markets has prompted some fund companies to consider strengthening their international offerings and the marketing efforts behind those funds, mutual fund executives say.
Fueling the interest is international funds' fourth quarter growth, which outpaced U.S. funds' returns. International funds returned an average of 25.97 percent compared to 18.97 percent for domestic funds. For 1999, international fund returns averaged 25.59 percent.
"International funds are one area that we are thinking about providing additional product offerings," said Elizabeth McKown, a product manager with State Street Research of Boston. "We've started to get some feedback from our sales force that many of the financial professionals that have been loyal customers are looking for international diversification."
With only three international funds, one of which is an international equity retail fund introduced only a year and a half ago, State Street Research does not have a broad international offering, McKown said. But international funds are considered a new priority at the company and it wants to add another international equity retail fund. It is also actively recruiting international analysts and portfolio managers, she said.
State Street Research is not the only company looking for that kind of personnel. The demand for international talent is on the rise, according to Don Dzurilla, president of Dzurilla International of New York, an executive recruiting firm that serves the financial industry.
"There has been a staffing increase in foreign research, portfolio managers and marketing folks," he said.
A rebounding Asian market has prompted some fund companies to start looking for additional international talent, according to Joe Preston, president and CEO of Preston and Company of Clinton, N.J. an executive recruiting firm for the financial industry.
"There are a couple of mutual fund companies that we've spoken with that are looking to increase their investment management staff in an international, offshore and global perspective," he said. "Whether that is analysts, portfolio managers or salespeople, certainly there's been an increase in the need for international and offshore professionals. To some extent this is directly related to the resurgence in international markets."
Fund companies are also increasing the marketing of their international funds. The performance of the international markets has provided a good impetus for Oppenheimer Funds of New York to increase advertising for its international funds, said Bruce Dunbar, director of product marketing.
"I think we're going to focus even more on those funds than we have in the past," he said. "As the world markets ebb and flow, I think the emphasis will follow suit."
Oppenheimer will probably increase the number of print advertisements it runs and is developing television commercials that provide more information about its international funds than existing commercials do, he said.
State Street Research is also increasing its marketing efforts, McKown said.
"We will be featuring international funds more in our promotions this year," she said. "We will provide brokers with materials that will help them educate their investors and raise awareness of the value of diversification. This is a good way to generate sales in this channel."
While many fund company executives are expressing interest in the international sector, some others remain cautious.
"I do think it's almost seasonal," said Bob Boulware, president of Pilgrim Funds of Phoenix, Ariz. "At the end of every great domestic year, investment professionals take another look at the year to see what sector has not participated. So it's not new to us to see renewed interest after the first of the year in the international category."
A strong U.S. market could make sales of international funds difficult because many investors are content with the returns they can get with a U.S. based fund, said Boulware.
But, financial professionals are looking for diversification alternatives for long term, high net-worth investors, said McKown.
"I don't think our international funds will get us through the door, but they won't be difficult to sell," she said.