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Looking for a Few Good Fund Firms

Sectoral Asset Management won't ally with just any fund company.

It is searching for a fund group that recognizes the needs of the aging U.S. population, understands the trends in healthcare fueled by genomics research, pharmaceutical breakthroughs and medical advances, and wants to make a long-term commitment to the sector, chief marketing officer Martin Noel said.

Healthcare and biotech funds have been increasing in popularity, although not every fund group has jumped on healthcare and biotech bandwagon. Still, at the end of January 1996 there were only 25 such sector funds available in the U.S. As of Oct. 31, that number had increased to 153, according to Morningstar.

Sectoral says that it offers interested fund companies a trio of benefits. "We bring them instant credibility in this asset class, and we bring them our experience and our advisory board," said Noel.

Sectoral will continue to tap into the scientific knowledge of its seven-member Scientific Advisory Network of experts as it sub-advises new funds. Sectoral pays each of the advisory board members a retainer. In return they share their expertise and technical scientific knowledge with the managers but do not weigh in on the actual investment decision process. Each advisor oversees a different specialty, and hails from renowned institutions such as the University of Geneva, the National Institute of Health in Bethesda, Md., and Scripps Research Institute in La Jolla, Calif.

In addition, although Sectoral believes it can double the assets it now manages with its current resources, and from its Montreal headquarters, it would consider establishing a U.S. office in the future. Even farther down the road, Sectoral might consider expanding its money management expertise into another sector or two, Noel said.