A small midwestern money management firm is hawking a global mutual fund with an unusual investment strategy to small bank trust departments.
Kornitzer Capital Management Inc., Kansas City, Mo., is pitching the Buffalo USA Global Fund, which limits investments to U.S. companies that get at least 40% of their earnings from overseas. Most global funds invest in both international and domestic stocks.
The company is hoping to tap a growing interest in international markets among trust customers, said president John Kornitzer. He added that his firm is negotiating to sell the fund through three banks, each with less than $200 million in assets.
Still, he acknowledged that most bankers dismiss him readily, since the fund was only founded last year.
"They say, 'You don't have a track record,'" he said. "Stick around. You'll see."
Mr. Kornitzer expects his fund to appeal to conservative trust customers who have been tempted to invest in international markets, but are still afraid of them. Moreover, the fund is cheaper than most. Because it only invests in domestic companies, the fund doesn't have to rely on costly overseas research.
The Buffalo fund's expenses as a percentage of assets are 1.06%, compared to the typical 1.75% of global funds, according to Michael Lipper, president of Lipper Analytical Services Inc., New York. Mr. Lipper said the expenses of these funds can reach as high as 3% of assets.
"Here's a way to play in the international arena at one-third the cost with more safety," Mr. Kornitzer said.
So far, the fund's investment strategy is working, Mr. Lipper added. Buffalo USA has racked up a 23.25% one-year return as of Aug. 15, ranking sixth out of 140 in its category.
"The numbers so far are pretty good. We'll see how it works long term," Mr. Lipper said.
Mr. Lipper added that trust officers may want to employ the fund in accounts that restrict investing in overseas companies.
Mr. Kornitzer, 51, founded his company seven years ago, after an 11-year stint as a portfolio manager in the employer's reinsurance division of GE Capital Corp.
Kornitzer Capital manages more than $1 billion in assets, mostly for pension plans and wealthy individuals. Buffalo Group of Funds manages $80 million.
