Swiss Bank Corp. to Offer Two SEC-Registered Funds
Swiss Bank Corp. is preparing to introduce two international mutual funds that will be open to U.S. investors.
The funds will be the bank's first managed in the United States and registered with the Securities and Exchange Commission.
20 Existing Funds
U.S. citizens cannot purchase shares in Swiss Bank's existing funds because they are not registered with the SEC. It now has about 20 funds managed in Switzerland, Luxembourg, and the United Kingdom.
Swiss Bank hopes the two additions will expand its U.S. customer base, which consists mainly of wealthy people.
The minimum investment for the funds will be $1,000; the minimum for individual asset management at the bank is generally $1 million.
Looking for a Larger Market
The funds give the bank "a way of tapping into a larger market," said Malcolm A. Clinger Jr., chief investment officer. "We want to be able to work with customers that don't have the minimum for customized portfolios."
The funds also may be a stepping-stone for people who will eventually qualify for private banking and for affluent individuals who want to invest a small amount to see how the bank's investments perform.
U.S. Business Growing
The bank has focused in the United States on attracting affluent clients for its private banking business.
And it has established a significant customer base in this country. As of midyear, the company had $10.03 billion in assets in the United States, or about 8% of its total worldwide.
Last winter, bank officers said deposits in the U.S. private banking unit had increased 30% in two months because of a consumer flight to quality.
The bank has already filed with the SEC to offer a short-term global bond fund and will soon file to offer a global equity growth fund. As a foreign-owned institution, Swiss Bank can manage and broker its funds without having to use an outside provider.
Because Swiss Bank specializes in international investments, the new products are a "mirror image" of core bank businesses, Mr. Clinger said.
Competition in Global Funds
A growing number of U.S. banks are introducing international funds to attract clients interested in global investment and diversification.
Citibank, for example, this spring introduced an international fund, the Landmark International Equity Fund, through its private bank.
And other foreign-owned banks are considering whether to register funds with the SEC so they, too, can solicit U.S. clients. To attract business, these banks talk up their expertise in overseas markets and their strong financial health.
"The interest for international funds...remains in place, so I suspect there will be others to come," said Henry de Vismes, head of international investment in the private banking division at Citibank. "It's a question of joining a universe which is rapidly growing."
"It's become more and more of a competitive environment," said Marcel Landesmann, an assistant portfolio manager in New York for Union Bank of Switzerland. While mutual funds are one of the main product lines at UBS, the institution offers no SEC-registered funds.