Banks wanting to build an affluent customer base for their mutual funds could try to imitate Societe Generale, but they would have a hard time matching its talent.
Jean-Marie Eveillard, 56 years old and an investment management star, is president of Societe Generale Asset Management Corp., a registered investment advisory firm in New York that is 80%-owned by the Paris-based bank. Wealthy Americans have flocked to the fold, putting in an average investment of $22,000.
Established in 1970, SoGen International Fund has $3.3 billion under management, and it also is the marquee attracting customers to three newer funds, the SoGen Overseas, Gold, and Money portfolios.
Although it is a global fund in the sense that it invests in both U.S. and foreign securities, the "international" name was chosen long before that word became synonymous in mutual fund jargon with investments outside the United States.
The newer funds, which isolate strategies used in the original balanced one, were rolled out three years ago. Since then, the Overseas Fund, which invests only in foreign securities, has taken in $700 million of client money. The track record is what keeps them coming.
"Eighteen years ago, we happened to be in the right spot at the right time," Mr. Eveillard said. "So we were there when Americans began to develop an insatiable appetite for mutual funds."
Mr. Eveillard, who has worked 35 years for Societe Generale, has a history of succeeding. SoGen International has proven so popular, it had to be closed to new investors for more than a year starting in January 1994.
"When I first gave the news to Paris that we were about to close, they hit the ceiling, saying, 'No French fund has ever closed down!'," Mr. Eveillard said. "But I said, 'I can give you some examples of some American ones that have.' " A respectful but distant relationship is maintained with headquarters in Paris.
The all-American customers of the SoGen funds are looking for diversification.
"It's a way for most folks who don't understand the complexity of international markets to get exposure in a portfolio without some of the risks," said George Luciani, a certified financial planner at Capital Planning Advisory Group, Yardley, Pa.
The SoGen International Fund is viewed as a valuable investment by advisers who see it as a rare opportunity to get a balanced, yet noncorrelated return from one allocation. It's considered a portfolio stabilizer, especially since Mr. Eveillard has performed well during down markets.
"It's an all-weather fund," said Mark L. Beesley, a certified financial planner who is director of investments at Today's Bank, Rockford, Ill.
Though some think of international investments as having high risks but high rewards, those who recommend investing in the SoGen funds say the main attraction is a lack of volatility.
"He's offering a ride in a Cadillac rather than a Corvette, which is great for everyone except the most aggressive investors," said investment adviser Gerard T. Breitner of Excomp Asset Management Ltd., New York, who manages $46 million for wealthy clients.
Mr. Breitner, who said he invests his own money in SoGen International, added, "Jean-Marie is one of the world's greatest stock pickers, and he offers 70% less risk than the market overall."
Although labeled a star, Mr. Eveillard is self-effacing about his status and not so sure it should matter. He supervises a staff of 25, seven of whom work on investing.
Mr. Eveillard said his connection with the fund family might be a selling point but then he quickly contrasted this with the success of the American Capital funds, which are managed by a quiet team.
"The route of the so-called star manager is not necessarily the only one," he said.
In addition to investment performance, planners and advisers are impressed by Mr. Eveillard's demeanor.
"He's a very humble man, considering he runs such a respected fund. He's not a flashy man," said Mr. Beesley of Today's Bank. "I've met some fund managers you don't want to be in the room with. You want a fellow like Eveillard."
To hook up with the coveted financial intermediaries, SoGen has two in-house wholesalers who divvy up the United States into territories and spend most of their time on the road, meeting with brokers and planners. Mr. Eveillard himself often meets with intermediaries, either one-on-one or speaking to conferences.
SoGen funds charge an up-front commission, or load, paid by the investor to the dealer, and they are sold to U.S. investors through financial planners and brokers. But they can also be bought on a net-asset- value basis through Charles Schwab & Co., the discount broker.
"Your wire houses won't sell them because SoGen only pays a dealer commission of 3.75%, instead of over 5%," Mr. Beesley said. "But the way I look at it is, you retain your clients and don't have to apologize."
The heavy usage of intermediaries to sell funds is a habit many U.S. bank-owned mutual funds would like to acquire.
While American banks may have the advantage of using branches to sell mutual funds, Mr. Eveillard said, being a bank-sponsored asset management firm is not necessarily a plus because U.S. investors think of checking and loans when they hear the word "bank."
The institutional backing of mutual funds is not highlighted in marketing discussions, he said, because the United States is a market with many successful independent companies. "Frankly, the individual shareholder in Montana or his broker either hasn't heard of Societe Generale, or they don't care," Mr. Eveillard said.
Mr. Eveillard said he sees global funds managed by Oppenheimer, Scudder, and Franklin Templeton as his closest competitors. And many of those funds are sold by planners who work for American Express Financial Advisers, an enviable sales platform the SoGen funds have not mounted. But their manager does not expect the world to beat down his door.
"It's such a big market, we don't need to appeal to everyone," Mr. Eveillard said. "We found a niche of providing reasonable return without too much risk."
His conservative reputation can be attributed to a tendency to be finicky about securities. "He's not afraid to keep very high cash positions - sometimes as high as 40% - if he doesn't see what he likes," said Mr. Luciani of Capital Planning.
A general propensity to be on guard has won Mr. Eveillard a lot of confidence. He said that on the rare occasions a prospect has asked whether his bosses in Paris wield any power over investment strategy, the answer has been a simple "no."
Yet if the issue of control from Paris is pushed further, the response is even more straightforward.
"There may be greater comfort with the (fact) that there are people in Paris who would promptly replace me if I start drinking, stop working, and go chasing women," Mr. Eveillard said.
