Believing the U.S. stock market is losing steam, many bank brokerage executives are touting international mutual funds to their staffs of investment representatives.
But no matter how well international portfolios perform, they are tough to sell to investors, many of whom consider them risky and exotic. So brokerage executives are trying to improve sales techniques, since high returns on domestic stock funds have been doing most of the selling job.
Gerald Thomas, president of the brokerage at St. Paul Federal Corp., Chicago, said that his sales reps are "open to selling international funds," but that training them to do so takes time. "They've been so used to selling performance."
Bank brokerage chiefs are responding to the expectations of their in- house analysts and economists as well as those of mutual fund companies that are warning the U.S. stock market won't offer returns above 10% this year.
Such predictions aren't dire. But compared to the double-digit returns investors have been getting over the past few years, the U.S. stock market in 1997 may prove to be a yawn.
And markets overseas are beginning to look enticing. European and international funds were the only two equity objectives with positive returns in March, according to Lipper Analytical Services Inc., New York.
Latin American funds were up 13.68% in the first quarter, and emerging market portfolios were up 9.57%, according to Lipper.
Mr. Thomas acknowledged that despite his own hawking of international portfolios, they still only make up 6% of St. Paul's sales of mutual funds.
"International is probably an important place to be right now," agreed J. Pinkney Kellet, president of the brokerage at Coastal Federal Savings Bank, Myrtle Beach, S.C.
Mr. Kellet said back in August he was getting telephone calls from investors who had witnessed market turmoil and asked if they should plunge more money into domestic growth funds. Mr. Kellet began telling them to look overseas, and he is recommending some clients extend the weighting of international funds to 35% of their individual portfolios.
He says he likes American Funds' Europacific Growth Fund, a large company portfolio, and "for the younger, more aggressive" investor, Colonial Group's Tiger Fund, which invests in Asia. He also sells Morgan Stanley Global Value Fund.
Some bank brokerage presidents say international investing may be hot with brokers, but customers aren't likely to flood bank lobbies asking for them.
"I don't think there are a lot of investors who of their own volition will go to international investing," said David Kundert, chairman of Banc One Investment Management and Trust Group, Columbus, Ohio.
Banc One reps are promoting asset allocation services and wrap accounts, which automatically put customers' money into international portfolios depending on risk tolerance, he said.