OppenheimerFunds Inc. is looking to gather more assets from high-net-worth customers with a plan to offer them a way to reduce taxes and help charities.
By the start of the fourth quarter, OppenheimerFunds will set up a charitable foundation to which individuals may make tax-deductible donations and have the money invested in the company's mutual funds. Some of the proceeds would be distributed to charities they would choose, said James H. Ruff, president of OppenheimerFunds' distribution arm.
The company has not set a minimum investment or chosen a name for the foundation. OppenheimerFunds is awaiting approval from the Internal Revenue Service, which takes several months, Mr. Ruff said.
Charitable-giving accounts have proven to be a popular way to boost assets at a number of companies, among them Fidelity Investments of Boston, Vanguard Group of Valley Forge, Pa., and Charles Schwab & Co. of San Francisco.
"This is something I believe you're probably going to see a lot more firms do, because for high-net individuals it makes sense," Mr. Ruff said.
The move into charitable giving follows a recent announcement by the New York fund company that it plans to manage so-called "separate accounts" for wealthy individuals. Separate accounts -- managed portfolios of stocks or bonds based on a specified investment style -- give the investor more control over the types of securities held. Such control can, among other things, help the investor mitigate tax consequences.
Mr. Ruff said OppenheimerFunds has signed agreements with a few brokerages to distribute the accounts, though he declined to name them. The accounts will be managed with a value style by Trinity Investment Management, which OppenheimerFunds bought early last year.
High-net-worth investors want more than mutual funds, and "we believe we have to provide those solutions or we're not going to have them as clients," Mr. Ruff said.
However, there are challenges in tapping the high-net-worth market, including a limited client base and a lot of competition.
"Everybody would like to believe that they've found the sweet spot in the market, but once they've got the sweet spot identified, everybody and his brother is there," said Geoffrey Bobroff, a mutual fund consultant in East Greenwich, R.I.
OppenheimerFunds, however, is not putting all its eggs in one basket. It also plans to expand its variable annuity subaccount business. It works with 19 insurance companies, and hopes to get into a minimum of 10 more programs by the end of 2000, Mr. Ruff said. OppenheimerFunds also plans to launch a new mutual fund in mid-May that will initially focus on bandwidth technology, he said.
OppenheimerFunds had $127 billion of assets as of March 15, according to Mr. Ruff. The figure includes mutual funds, variable annuity subaccounts, and the company's institutional business.
