If investment managers have any regrets about the last 20 years, foremost may be that they will never experience another period like it.

Unless, as some are hoping, the next two decades play out in Europe the way the last two did in the United States.

U.S. investment managers - whose home market is showing signs of age - are gearing up for a major offensive in Europe as the market there becomes less focused on proprietary mutual fund sales.

Several large U.S. banking companies that manage mutual funds, among them Citigroup Inc., Chase Manhattan Corp., and Mellon Financial Corp., have stepped up efforts in recent years to gain a piece of Europe's asset management pie.

Many fund companies - Scudder Kemper Investments, Fidelity Investments, and Alliance Capital Management, to name a few - are putting down stakes there.

This trend, which observers expect to accelerate over the next several years, has been spurred chiefly by the attraction of a less mature market - complete with changing demographics - and a growing savings culture fueled by the privatization of public pension fund management. Another factor is privatization of industry, which has contributed to a shift toward equity investing.

As was the case in the United States before the boom in equities markets and the mutual fund industry, proprietary funds dominate the market in continental Europe, where banking companies double as manufacturers and distributors of mutual funds.

According to a study by Financial Research Corp. of Boston and London-based Sector Analysis Ltd., sales of proprietary funds - those manufactured and distributed by the same company - constitute about 77% of fund sales in Europe.

That is very close to the share that proprietary funds had in the United States in 1980 - 80%. Since then, that number has plunged to 33%. Though that kind of shift will not occur overnight in Europe, the share could fall by as much as 12% within five years, the study projected. As consumers demand more investment choice, competition from third-party fund companies will intensify.

Europe provides a great opportunity for U.S.-based players because they are intimately familiar with a multimanager, multiproduct approach, said Jon Groom, president of Mellon Global Investments. In most other parts of the world, "it's been a very closed system," he said.

Mellon, which in July 1998 bought a majority stake in Newton Management Ltd. of London, has six salespeople to cover Europe and plans to increase its presence. It also plans to expand its offerings overseas. "It's a question of matching up the good-performing product with the market," Mr. Groom said.

SSB Citi Asset Management Group, a unit of Citigroup, also has aggressive plans for Europe. Last February, Citi created a retail asset management business to focus on developing, marketing, and selling mutual funds across the Atlantic. SSB Citi has 44 employees in Europe but plans to have 62 by yearend, said Jill Paitchel, head of retail asset management for Europe, the Middle East, and Africa.

Conquering Europe is not without its hurdles, of course.

"There's a huge opportunity for asset management firms to pick up business, but there are still barriers to entry, and I think sometimes that these are underestimated," said Christian Yates, head of sales for Chase Global Asset Management and Mutual Funds for Europe, Africa, and the Middle East.

Challenges include building a brand name, fending off competition from established nonbank companies in Europe, and dealing with regulators in the various countries, Mr. Yates said.

Richard Wastcoat, managing director for Fidelity's United Kingdom mutual fund business, echoed Mr. Yates on the importance of building a local brand. He said Fidelity has spent more than $100 million on advertising in Europe in the last 10 years.

"I think there's a naivete that American companies will just show up and all of a sudden dominate," he said.

Executives also recommend that U.S. fund companies tailor their European strategy to each country.

Alliance Capital Management of New York, for example, subadvises mutual funds in Italy for a consortium of six Italian banks. But in Germany it sells its ACM Funds through independent financial advisers and banks, said Kurt H. Schoknecht, head of Alliance's offshore funds business.

Companies need to understand the markets from a local perspective and design products accordingly, without "trying to force anything that just won't work," Mr. Schoknecht said.

He said Alliance Capital has a sales staff of 15 in Europe, including the United Kingdom, and plans to have 28 by yearend.

Another task for U.S. firms is to help banks in Europe become more relationship-driven than product-driven, said Maliz Beams, head of retail offshore mutual fund business at New York-based Scudder Kemper.

Though banks are opening their doors to third-party fund companies, they will narrow those lists. The survivors will be those that can provide the best sales and marketing support, Ms. Beams said.

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