Massachusetts Financial Services is out to persuade bank brokerage customers that international mutual funds have a place in their portfolios.
This fall, the Boston-based mutual fund company will begin marketing through banks three new equity funds that invest solely in stocks issued outside the United States, said Lisa Jones, senior vice president for financial institutions sales.
The company has begun training its 16 bank wholesalers to explain the funds to bank-based brokers, Ms. Jones added.
Selling international funds through bank brokerages promises to be something of a stretch. Though many investment experts maintain that international funds should make up 10% of a well-diversified portfolio, sales of such funds through banks so far have been negligible.
That's because investors at banks, for the most part, are rookie mutual fund buyers who are just getting their feet wet in domestic stock and bond funds, Ms. Jones said.
Brokerage firms and independent financial planners are generally doing a better job than bank-based brokers of marketing international funds, she added. Of the 30 or so mutual fund investment categories, international equity funds are among the top five sellers.
The message Ms. Jones wants to drive home to bank-based brokers is that "somebody else is selling the(se funds) to your customers."
To be sure, banks are beginning to diversify their investment offerings. Massachusetts Financial, which manages $35 billion of assets, has seen huge growth in domestic equity fund sales in the past two years, Ms. Jones said. These funds are contributing 85% of the volume.
To help representatives push international funds, Massachusetts Financial is developing sales literature with detailed descriptions of companies in the funds' portfolios. The literature will also describe political and economic climates in the countries where the funds invest.
"That way, the representatives have more confidence in what they are speaking about," Ms. Jones said.
International funds are different from so-called global funds, which include both U.S. and foreign stocks in their portfolios.
Massachusetts Financial decided to add international funds to its offerings after making a sales agreement in March with a European financial services conglomerate, Hypo Foreign and Colonial Management Ltd.
Industry observers doubt whether bank customers will take to international investing.
"There's a finite appetite for these kinds of funds among bank customers," said David Master, vice president and senior consultant at Optima Group, Fairfield, Conn.
He added that Massachusetts Financial is up against competitors such as Franklin Templeton Distributors Inc. and Fidelity Investments, which have long track records in international funds and also have stronger footholds in banks than most other fund companies.
