Amid rising interest in global investing, some banks are beginning to add international stock and bond funds to their mutual-fund product mix.
But true to their reputation, bank customers remain cautious. Demand for international funds at banks has been anemic.
Nevertheless, some bank and mutual fund company executives believe there is considerable opportunity ahead, and are preparing for an increase in demand for international funds.
LaSALLE NATIONAL CORP.
Though it is just getting started in mutual funds. LaSalle National Corp. is giving a big push to international mutual funds.
LaSalle is a unit of ABN Amro. a Dutch banking giant with more than $250 billion of assets and a long track record in the international arena.
Of 16 portfolios in the Chicago bank's Rembrandt family of funds, four invest overseas. Launched last January, the Rembrandt funds are managed by LaSalle National Trust, with ABN Amro serving as adviser on the international portfolios.
According to Paul Kampner, senior vice president at LaSalle National Trust, the international funds are targeted to sophisticated investors in need of diversification, particularly high-networth and trust customers.
Will bank customers flock to international funds? Mr. Kampner says thee jury is still out, but advocates educating customers about the advantages of global diversification.
"Without information, people do what's comfortable and not always what's best." he said.
Executives at San Francisco-based G.T. Global, which specializes in managing international and global funds, believe that it's just a matter of time before bank customers warm up to international funds.
"I think the biggest hurdle we face is an awareness of what exactly |international" means." said Ray Cunningham. G.T. Global's national sales manager for bank sales.
"As customers go about their daily lives, they have diversified themselves and their consumer spending habits internationally," Mr. Cunningham added.
The company, which gets about 8% of its sales through banks, has had success with its strategic income fund, which invests in U.S. government bonds as well as sovereign debt of several European nations.
1ST AMERICAN OF LOUSIANA
Only a limited marked for international funds has been found by First American Bank and Trust of Louisiana.
William Keith, executive vice president and trust officer, said First American primarily uses international funds in the trust and private-banking sides of the bank. There has also been demand on the institutional side, particularly among 401(k) plan clients.
First American sells an international bond fund and an equity fund, both managed by Bennington Capital Management.
The funds, which invest exclusively in debt and securities outside the United States, appeal to sophisticated, well-capitalized investors, usually trust or private-banking clients.
"Well-to-do customers with a high tolerance for risk will buy an international fund to balance out their portfolios." Mr. Keith said.
Retail sales of international funds have been negligible. In the coming year, however, Mr. Keith expects interest in international offerings to increase.
VAN KAMPEN MERRITT
Though it avoids offering funds that invest exclusively overseas. Van Kampen Merritt. the Chicago mutual fund company, relies extensively on international securities in its global funds.
In 1992 thee global fund that did best among bank customers was the global income fund. a short-term fund that offers a mix of U.S. and international fixed-income instruments.
Ann Marie Klingenhagen, a vice president and bank marketing manager, said international funds are not the centerpiece of Van Kampen's marketing strategy, which leans toward investments that provide customers with steady income and little risk. "That's not easily done in an international fund, particularly a sector fund that focuses on one country," she said.
The Compass family of mutual funds from Midlantic Corp. includes two international portfolios.
They are not hot sellers - yet But Ron Aungst, senior district manager for the Edison, N.J., company, expects demand for international funds to rise in the next few years as customers becomes more familiar with investing generally.
"People will come back after they've had seven or eight months in a particular fund, wanting buy more of the same," he said. But, he added, these repeat buyers need to be educated about the ups and downs of the market.
The bank's typical mutual fund buyer is 67 and a first-time investor seeking an alternative to certificates of deposit.
"It's difficult selling them the concept of a mutual fund to begin with, but to try and talk international -- now that's difficult," Mr. Aungst said.
Ms. Sullivan is a freelance writer based in New York.