Private bankers have started pushing stocks and bonds from overseas.
"You only have to look to Asia to see where the action is," says Mark Richardson, chief investment officer at Chase Manhattan Bank's private banking division.
He and other investment pros at commercial banks point out that U.S. companies' share of the world's stock and bond markets has shrunk. In the 1960s, U.S. companies represented about 65% of the world's market capitalization; today the figure is about 35%.
Bankers say the strengthening European economy and several booming Asian markets, such as Hong Kong, are ripe for investment. They also are telling clients that it is smart to diversify investment risk by going outside U.S. borders.
Investors cut themselves off from "considerably more than half of what's available" if they limit themselves to domestic markets, Mr. Richardson says.
Gearing Up
To carry out the new investment philosophy, a host of major U.S. banks have been unifying the domestic and international staffs in their private banking divisions.
They also are hiring a new breed of banker.
Mr. Richardson, for example, was hired six months ago from the Saudi Arabian investment firm Olayan Group to help Chase sell overseas investments to its rich domestic customers.
Similarly, Citicorp hired W. Neville Bowen, a native Briton who worked at Hill Samuel Investment Management Group, to head its newly formed global asset-management group. And Bank of America recently plucked Steven Champion from a Taiwanese investment firm for the new post of top international investment officer in its private banking division.
Pension-Fund Pacesetters
The move toward global investing isn't completely new.
More than 10 years ago, pension funds began diversifying into international stocks and bonds. Today, about 88% of corporate pension portfolios are invested internationally, with the largest share going into global equity markets. A much smaller share is invested in bonds.
Bankers say pension funds inspired much of the new private banking style. Wealthy people who sit on pension boards now are putting their own wealth into international markets.
"This is one of the hot buttons now," says Kent Price, head of international private banking at Bank of America. He leads its effort to attract non-U.S. customers but is starting to spend more time selling international investment products to the bank's domestic customers base.
The new international emphasis is a dramatic change for many banks.
Only a few years ago, Chicago-based Northern Trust Co. couldn't attract individual investors to its commingled trust fund that invested in international markets.
Today, says David Horn, senior vice president in charge of the bank's wealth management group, international investing is "the hottest thing in the money-management business."
Northern Trust's wealthiest customers now invest 3% to 5% of their assets in international stocks, Mr. Horn says. While that's far below the 30% to 50% bankers typically say should be invested overseas, these executives agree that it's a good start.
Union Bank of Switzerland recommends that its clients invest about 50% of their assets in non-U.S. markets but finds its wealthy clients want to hand over only about 20% of their money for investment in foreign markets.
"The concept of global diversification is easily understandable," says Hans Peter Lochmeier, UBS' senior vice president in charge of investment services. "However, when it comes to the details, there are many, many questions."
