The Morgan Stanley Global Equity B fund is one of just a few international funds that has attracted significant assets quickly.
Since its introduction last October, it has grown to $551 million of assets, climbing to the 20th-largest global fund in the United States, according to Lipper Analytical Services.
That's an impressive position on a list where the top 10 funds all boast track records of five years or more. Despite the "diversify, diversify"drumbeat being sounded by financial advisers across the country, global funds are still a tough sell. American investors, enamored with the S&P, hesitate to divert assets into markets they understand less.
"We were pretty fortunate for a couple of reasons," explained Scott Becker, product manager for global and international funds at Van Kampen American Capital. The fund is a clone of the Morgan Stanley Institutional Global Equity Fund that has a long track record and a five-star Morningstar rating. The knock-off retail version will have to wait three years to win its stars from the Chicago rating company, he said.
"How one overcomes that is an educational process," said Joy Montgomery, president of Money Marketing Initiatives, Basking Ridge, N.J. She said fund companies have to work diligently to hammer home the idea that global funds offer some significant opportunities. A segment of investors with some knowledge continue to be scared of international holdings and take a short- term view in preferring to diversify just within the United States, she said. "To be just in U.S. investments, you are ignoring a significant percentage of the world's markets."
That's the message Van Kampen has been sending loudly, Mr. Becker said. "We really need to explain how a global portfolio fits into an investor's over-all portfolio."
To market the fund, the company produced a video featuring a discussion among portfolio managers. Because they are based in London, the video was an unusual but effective tool in getting the message across, he said.
The company produced brochures that hit upon the theme that this was a clone of this institutional fund with a proven history, he said. The two funds are virtually identical, with only a variation in fees and in a few other minor details, he said.
With many investors already familiar with the institutional fund, that built some assets, he said.
"We thought it would do well because we were bringing out a good core offering," he said. It invests in better-known large companies, he said. That, and the fact that about one-third of the fund's holdings are in U.S. companies, softens some investor resistance. "This U.S. economy just continues to churn out the numbers," he said.
The pace at which the fund has attracted assets outpaced internal expectations, he added.
The most impressive growth for a new global fund, however, came from Merrill Lynch's Global Growth Fund B. Also introduced in October, it grew to $1.1 billion and attained 15th position on Lipper's ranking. Merrill Lynch did not make anyone available for comment.
Companies like Merrill Lynch and Morgan Stanley get a boost in attracting assets because of their name recognition. Smaller companies have a harder time growing assets quickly in this sector, Ms. Montgomery said.