As markets around the world gyrated wildly last month, investors and fund companies alike were reminded of the risks of investing abroad. But they also got a taste of the uncertainty and volatility that make the potential rewards of global investing so rich.
For the mutual fund companies and banks featured on the following pages, the appeal of investing abroad couldn't be clearer.
Eager to feed the American investor's increasing appetite for international assets, companies ranging from the mass-market OppenheimerFunds Inc. to the more upscale Glenmede Trust Co. are launching their own globe-spanning funds at a dizzying pace.
As Henry A. Frantzen, the Federated Global Research executive interviewed on page 10 put it: "To exclude international is like offering investments in the alphabet only as far as the letter M." Indeed, a 1997 Scudder/Gallup poll found that some 6.7 million American households now invest internationally through mutual funds-one million more than in 1994.
Investors are not the only ones searching for global flair. Some 60 U.S. fund managers, including the giant Fidelity Investments, have set up shop overseas. These companies have flocked to tax-friendly domiciles in a bid to sell their wares to investors abroad.
For these pioneers, the lure is simple. The aging of the baby boomers is a global phenomenon, as is the shift away from defined-benefit plans to defined-contribution plans. As the burden of planning for retirement moves away from governments and on to individuals, opportunities for truly global investment managers abound.
But so do pitfalls. As the article on page 8A reveals, even the mighty Fidelity stubbed its toe in its first foray into Europe.
U.S. managers overseas must grapple with a host of issues not present on this side of the Atlantic. Retail funds do not enjoy the same popularity in Europe as they do here.
And, in sharp contrast to the U.S. market, overseas investors are used to buying their funds at their banks-not through brokers or fund companies.
To surmount these hurdles, some companies, such as Massachusetts Financial Services and Germany's Hypo Bank, have decided to navigate foreign lands together. But, like everything else in the global markets, the success of such joint ventures is far from a sure thing.
