A year after acquiring Mercury Asset Management, Merrill Lynch & Co. has had considerable success in selling shares of two new international products to U.S. investors. Merrill announced this month that in September and October alone the company had raised nearly $680 million from two new mutual funds, the Mercury Pan-European Growth Fund and the Mercury International Fund.
Merrill officials are saying that the funds' early success in a jittery domestic market is due not only to Merrill's huge sales force and Mercury's brand, but also to its own research which has been indicating that Europe offers great investment opportunities.
"Put them together, and you've got a great combination," a Merrill Lynch spokesperson said. While the two new Mercury funds were sold exclusively through Merrill's own brokers for the initial offering, Merrill plans to distribute the Mercury family of funds through outside distributors, the spokesperson said.
Geoffrey Bobroff, a mutual fund consultant from East Greenwich, R.I., said the current popularity of Europe was probably one of the driving forces in the Mercury funds' success - especially the European fund. Investors are excited about the opportunities arising from Europe's Economic and Monetary Union and the conversion of its members to a single currency, the euro.
Merrill Lynch already had several international and European funds. Investors are especially attracted to the Mercury funds most likely because Mercury Asset Management is based in London, in the midst of the changes going on in Europe, and because it has a strong reputation in European investing.
Another reason for the Mercury success may be that Merrill's sales force has a great deal of experience selling international funds. For the third quarter 1998, assets under management in Merrill Lynch's proprietary funds, excluding money market funds, was $74 billion, according to Cerulli & Associates of Boston. Of that, 26 percent was in international equity funds, so Merrill's sales force is experienced in selling international funds like the Mercury funds, said Cerulli consultant Andrew Guillette.
As of September, Mercury Asset Management was managing $170 billion in assets for mutual funds and institutional clients. Mercury funds are available in Europe, Japan, Latin America, the Middle East and the Far East. Additional U.S. mutual funds under the Mercury name are planned by Merrill, which has filed documents with the SEC for the Mercury Core U.S. Growth Fund and the Mercury Gold and Mining Fund.