With no end in sight to the stock market's volatility, fund companies and banks that sell investment products are trying to help their customers reevaluate their investment goals.
They are attempting to refocus investors' attention on long-term objectives, asset allocation, and portfolio diversification. And they are advising investors to see the downturn in the market as a buying opportunity.
At Fleet Financial Group's Galaxy Funds, for example, representatives have been calling investors to find out if their goals have changed, said Robert L. Ash, head of the $13 billion fund family.
"I call it a telecounseling campaign," said Mr. Ash, a managing director for the Boston-based Fleet.
Fleet started managing investor expectations a year ago but met resistance, because people were still riding the "10-year bull market," Mr. Ash said.
"Now investors are starting to realize that they had unreal expectations," he said.
William M. Ennis, a managing director in charge of First Union Corp.'s $52 billion Evergreen Fund family, is staying in touch with investors through the mail.
The Charlotte, N.C., banking company included a letter from Mr. Ennis to investors with third-quarter statements, which went out last week. The letter urged investors to visit their financial advisers and ensure their investments are in keeping with their "time horizon."
For those who feel comfortable with short-term volatility, Mr. Ennis suggests an Evergreen Systematic Investment Plan or dollar-cost-averaging program, which lets investors put a fixed sum into securities at set intervals. He also recommends that investors take "another look" at bond funds.
Mellon Bank Corp. in Pittsburgh is also talking about bond funds. Its Dreyfus Corp., which manages around $100 billion of assets, included an article on fixed-income products in its quarterly report along with a question-and-answer session with Richard Hoey, Dreyfus' chief economist. The material is on its way to investors now, a spokeswoman said.
Meanwhile, John Nuveen & Co. has sent brokers a research report by the head of its fixed-income research department, along with a brochure titled "The Case for Municipals in the Current Market," said vice president Michael Forstl, manager of Nuveen's financial institutions division.
In addition the company plans to send a brochure titled "Staying the Course: The Importance of a Long-Term Perspective" to brokers who sell its growth fund. The pamphlet provides a historical perspective on the market as well as a question-and-answer segment.
In late September, Nuveen arranged a conference call between brokers and Robert H. Lyon, president and chief investment officer of Institutional Capital Corp., which manages its growth and income fund. Another conference call is planned for this week , Mr. Forstl said.
Nuveen is based in Chicago and has $51 billion under management.
In mid-October, Alliance Capital Management, New York, plans to start sending banks and brokerages a glossy 20-page brochure on the importance of long-term investing, a spokesman said.
Topics include why people invest, how markets have performed in the past, the benefits of long-term investing, asset allocation versus market timing, and the history of market corrections. Alliance manages about $260 billion of assets.
"The sentiment out there among investors ... changed somewhat in September, and people are becoming a bit pessimistic," the Alliance spokesman said. "We want people to have a proper understanding of what's going on from a long-term perspective."
The Forum for Investor Advice, sponsored by broker-sold mutual funds, recently published a 12-page guide to surviving a bear market.
"Bear Essentials: What to Do During Market Declines" advises investors to remain calm, seek advice, and consider adding to their holdings.
"The more shares you hold, the more you stand to gain when the next bull market comes along," the brochure observes.
Though it has been in production since early 1998, the publication is "hitting just about the time investors can use a calming influence," said Barbara Levin, the group's executive director.
"A lot of investors, especially young investors who have never seen a bear market, probably didn't get too nervous the first month that we had volatility in the market," Ms. Levin said.
"But now it's lasting longer, and my hunch is it's just about the time that a lot of people are really getting nervous."
