Alliance Capital Management, long known for its bond portfolios, has been racking up first-class performance over the last two years in its lesser-known stock funds.
Now the New York-based fund company, which has $52.9 billion of assets under management, is out touting the high returns, trying to win back the credibility it lost when the bond market crashed in 1994.
"We've really been cleaning the clocks of some of our brand-name competitors," said Richard Davies, Alli-ance's managing director overseeing sales through banks and brokerages.
But are Alliance's stock fund successes enough to help it improve its presence in banks? After all, most banks limit the number of mutual fund providers they will promote in their branches, and many are loath to make any changes to their rosters.
Since 1994, Alliance has been unable to carve out share among bank brokerages as fast as rivals such as Putnam Investments, Aim Management Group Inc., Franklin Resources Inc., OppenheimerFunds Inc., and Fidelity Investments.
Still, Mr. Davies and Alliance, which sells through 200 banks, have hardly thrown in the towel. Last year, company executives embarked on a 30- state road show to promote its stock funds. And Alliance reorganized and beefed up its sales units.
Most recently, Mr. Davies and his staff started visiting banks bearing literature that compares the two-year and 1996 returns of Alliance funds with those of portfolios popular among brokers.
In the growth fund category, Alliance's Premier Growth Fund and Alliance Growth Fund, which generated total returns in 1996 of 24.14% and 23.20%, respectively, bested two portfolios managed by Putnam and three by Aim.
The literature also points out that Alliance's Growth and Income Fund had a two-year total return at yearend of 71.31%-higher than Putnam Fund for Growth and Income, one of the highest-profile funds in banks.
Alliance's stock funds-which have held their own in the market downturn this week-have been buoyed by large-company stocks, observers pointed. These stocks have outperformed small, medium, and sector stocks, said A. Michael Lipper, president of Lipper Analytical Services, New York.
Mr. Lipper said Alliance could see a resurgence in banks if the market remains favorable to large cap stocks. "Many bank customers are long-term investors, and those types of investors feel more comfortable with big-cap stocks," Mr. Lipper said.
Alliance's high returns may warrant a second look, but some banks say getting their attention will take more than two years of good returns. "Our biggest complaint with Alliance is that their fund performance is fairly erratic" over three and five years, said Natalie Vaswani, mutual fund and annuity coordinator at National City Corp., Cleveland.
"Right now, we don't have any appetite to add products because we have so many other initiatives we're focused on," added Joel Calvo, president of PNC Bank Corp.'s brokerage.
PNC has already shut Alliance out of its list of preferred vendors, which include its proprietary Compass Funds as well as Fidelity, Putnam, Aim, Oppenheimer, Colonial Group, and Federated Investors.
