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Orbitex Is Embarked on Acquisition Spree


The name Orbitex may not be a household name in the mutual fund industry, but the chief executive officer of Orbitex Management of New York plans to change that and make his company a well-known brand within the next year.

Until recently, two-year-old Orbitex was a small fund family of just four specialized funds with $100 million under management. But Orbitex has begun introducing new funds and acquiring others as well as servicing companies with the goal of becoming a leader in asset management, fund servicing and distribution.

The company's parent organization, Orbitex of Zurich, Switz., which has $1.2 billion of assets under management and has been operating since 1986, has committed several million dollars to this expansion effort, said Richard Stierwalt, chief executive officer of Orbitex. This "eight figure budget, combined with traditional debt financing," will enable Orbitex to make a number of acquisitions over the next 12 months, he said.

Orbitex is interested in expanding in the asset management, distribution and servicing areas all at once so that it can offer a variety of products and services to customers as a turnkey asset management provider, said Stierwalt.

"Other companies that are already entrenched in the U.S. market would risk disintermediating customers if they were to broaden their offerings into new areas," said Stierwalt. "We are too new to do that."

Orbitex initiated its expansion plans last month when it acquired American Data Services, a mutual fund service company in Hauppauge, N.Y. ADS serves 50 clients with 140 mutual funds and $3 billion in assets under management.

Orbitex also recently became interim adviser to two funds and, pending shareholder approval, will become permanent adviser to the funds and will add them to its existing family. On March 1, Orbitex took over as interim adviser to the ASM Index 30 Fund (MFMN, 5/10/99). With $25 million under management, the fund tracks the 30 industrial stocks of the Dow Jones index. Orbitex became interim adviser when ASM's board ousted Vector Index Advisors of Tampa, Fla. as adviser because Vector was in danger of being sued for misappropriation of funds and could not pay fund expenses.

On May 5, Orbitex became interim adviser to another fund, the American Diversified Global Value Fund. American Diversified Asset Management of Los Angeles was previously the adviser to the $8 million fund. Orbitex actively sought to become adviser to this fund because the Orbitex Growth Fund is managed in a similar fashion, Stierwalt said.

On July 8, Orbitex will introduce a new fund, the Orbitex Health & Biotechnology Fund; in the fall, Orbitex plans to introduce a utilities and a financial services fund; and the company is awaiting results on bids to acquire several other funds.