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Managers Pursue Clients Over Internet


Following authorization by the Chilean Securities and Insurance Superintendent for mutual fund investors to subscribe and redeem shares over the Internet, a fierce struggle has broken out to capture this potential new market.

While some fund managers have stolen a march with aggressive publicity campaigns, in several cases causing friction with the Superintendent, others have preferred to outsource distribution of their funds. There are also some projects to sell foreign products.

The industry is betting on strong growth of national saving in mutual funds to boost fund assets way above the US$4.5 billion under management today, which represents approximately 7% of GDP.

Recent e-commerce figures are encouraging in this regard, with the number of firms engaged in electronic commerce in the country growing by 36% in September, according to statistics issued by the Santiago Chamber of Commerce.

A paradigm case is provided by Santiago Administradora de Fondos Mutuos, which is one of the firms that carried the banner on this issue and is now offering clients the chance to operate directly over the Internet.

Although at different stages of development, several bank-based fund managers are doing the same, thus confirming what seems to be a steadily strengthening trend.

Mention should also be made of the information and sales opportunities being made available by financial portals on the Internet.

As LFM learned from Andrea de La Calle, head of the financial supermarket run by Patagon.com, which now distributes the funds run by BCI Administradora de Fondos Mutuos and has also made deals with other fund managers, "the Internet sales channel has the advantage of anonymity, allowing people to find out about this product, which so far is not very well-known, without fear of embarrassment."

Meanwhile,Finanzaspersonales.cl is also working on a similar plan that is expected to start with BCI funds and later include Larran Vial and Tanner products.

The team responsible for the project claim to be facing certain operating restrictions, however.

The main problem is that, after investing in his chosen fund, the client is going to have to print out the application form downloaded from the site, and then deposit it in the fund manager's bank account.

A third way of using the Internet is for selling foreign mutual funds - cb.cl, for example, recently announced it would shortly be selling funds based in New York.

A similar development is expected with regard to the Skandia funds registered on the offshore market and distributed in Chile by Larran Vial, the fund manager that has just launched a new portal for investors in the retail segment.

Finally, the country's largest consulting firm, Econsult, has announced plans to explore other areas of business, after splitting from the rating agency Duff & Phelps.

According to information disclosed to LFM, one of the most important of these is likely to be mutual funds sales through the fondos.cl. portal.

Econsult's lead partner, Jose Ramn Valente, explained that one of the web page's strengths will be investment advice.