International funds come and go
October 12, 1998
Even as an increasing number of Asian and emerging market funds announce plans to liquidate, merge or change their mandates because of poor returns, INVESCO is starting a new international fund, the International Blue Chip fund.
The Denver-based mutual fund firm has hired Charles Schwab & Co. to solicit investors for its new fund. The offering runs through Oct. 28. Until then, the fund is only available through Schwab. INVESCO hopes to raise more than $30 million for the International and one other fund which it is registering. But this goal is subject to change in light of the current volatile markets. This effort marks the first time that Schwab and INVESCO have worked together on a subscription offering.
For the nine month period ending September 30, emerging market equity funds have lost more than 35 percent, according to CDA/Wiesenberger. Non-U.S. equity funds have fared better, but year-to-date have still lost 8.88 percent. As a result, at least three funds have announced plans to liquidate or have already done so, at least one fund is seeking to shift its investment mission and two others have stopped selling shares.
Nevertheless, INVESCO is not concerned about bringing out the fund at this juncture, said Laura Parsons, a spokesperson for INVESCO. In its marketing campaign, the company will emphasize that the manager of its new fund, Lindsay Davidson, has a strong record in managing international funds for institutional investors. Parsons also said that the very fact that international markets have performed poorly in the past year could make this the ideal time to start a new international fund because securities can be bought at bargain prices.
The fact that INVESCO is using Schwab to conduct its initial subscription of the fund should also help sell the fund at a time when many investors are fleeing international markets.
As of June 39, INVESCO had approximately $229 million of its $18.5 billion in assets under management in seven international open-end funds, according to CDA/Wiesenberger.
Among the funds that have announced plans to liquidate are the Robertson Stephens Developing Country Fund which held $13 million as of June 30 and The Van Eck Emerging Markets Growth Fund, which has asked shareholders to approve a plan of liquidation in a vote Nov. 10. The Citifunds Emerging Asian Markets Fund, whose assets fell to $800,000 after it lost 53.01 percent for the first nine months of 1998, liquidated on October 2, 1998.
Meanwhile, another Van Eck fund, the Van Eck Asian Dynasty Fund, with $13 million in assets, is asking shareholders to approve an expanded investment mandate to include investments in emerging markets beyond Asia.
Also, both the Orbitex Asian High Yield Fund, with $2 million in assets and Dimensional Fund Advisers' DFA Pacific Rim Small Company Fund, with $71 million in assets, have stopped selling shares.
The DFA fund suspended share sales on September 2. The fund had been offered only to large institutional shareholders and financial advisers who trade through omnibus accounts such as those of Charles Schwab's institutional marketplace. According to Weston Wellington, vice president of the fund, the adviser felt it was inappropriate to accept new money since the fund's 25 percent position in Malaysia means it is in a precarious position. Management is currently considering whether to segregate its virtually illiquid Malaysian securities into a separate investment account, said Wellington.