Facing shrinking marketing and advertising budgets, not to mention a worsening economy and poor performance, asset management groups of all sizes are asking their managers to get out of the office and help market their funds.

But the strategy is not without risk.

Using a portfolio manager in a public relations role can create embarrassing situations. Conseco suffered that problem last summer when it sent Thomas Pence, its former chief investment officer out on a media tour to explain the company's plummeting stock price. He later resigned as Conseco's CIO to become a portolio manager with Strong Funds of Menomonee Falls, Wis., after being quoted in an article in Barron's in which he denied any desire to leave the company. (See MFMN 10/30/00).

The firm still has two portfolio managers running fixed income funds, but Conseco outsourced the management of all of its equity funds following Pence's resignation.

While the firm has not sequestered its remaining portfolio managers from the media, it has shifted a lot of the public relations and marketing duties from the two managers to the company's director of investment strategy, said Barry Schwartz, a company spokesman with Schwartz PR Interactive.

Marketing Not Just For Small Managers

Across the industry, asset management groups are calling on their managers to take time to speak with the media and key distributors, according to Dan Sondhelm, VP of public relations firm SunStar.

As the economy has worsened, asset managers have watched their bottom lines more closely and one of the first cuts they have made is to marketing and advertising budgets, Sondhelm said.

To compensate, fund companies have been more aggressive with public relations campaigns and have thrust portfolio managers into the media spotlight.

And as performance has dropped off, many managers are hitting the road to talk with distributors and wholesalers about their funds in an effort to bolster withering sales, he said.

Add New Products

to the Marketing Mix

In addition, many fund companies are adding separate and managed account programs for institutional and high-net-worth clients. That creates another product that managers must not only manage, but also market, said Chris Davis, executive director of the Money Management Institute, the national association for the managed account industry. While experienced regional wholesalers are trained to work with large clients, some of those clients will want to meet with the portfolio manager who has oversight of their assets before they make any kind of investment decision.

While using portfolio managers to market funds and handle public relations issues is essential, the risks are numerous. A fund's brand is often tied to the portfolio manager who runs it and as the manager generates media attention, the fund's brand often becomes associated with that manager. However, a high-profile portfolio manager will likely bring attention from other firms and executive recruiters seeking to hire him away, Sondhelm noted. And if the portfolio manager leaves, investors and their assets often follow them out the door.

In order to keep managers from becoming overburdened with their marketing roles Nicholas-Applegate tries to leverage its public relations opportunities, said Rick Shaughnessy, a spokesman for Nicholas-Applegate. By doing simple things like placing transcripts of portfolio managers' interviews on its Web site and coordinating events so managers meet with a variety of groups in a particular area, the firm has been able to keep its managers relatively unburdened with marketing responsibilities.

And like many asset managers, Nicholas-Applegate provides some incentive to its managers to market their funds. The group compensates its managers based on several criteria, including the level of assets held in a fund or a separate account, he said.

But when asked if he would rather spend more time managing assets or marketing, Steven Ross, lead portfolio manager for Nicholas-Applegate's domestic managed accounts was unequivocal. "Managing assets," he said.

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