Union Bank of California is using a small fund to draw big attention to its Highmark family of mutual funds.
Though the San Francisco bank's small-cap value fund has just $80 million of assets, it has significant clout as a star performer.
The fund did better than leading indexes for the year that ended Sept. 30, spawning a marketing push that plays up the fund's performance and the attributes of the entire Highmark family. The group contains 14 funds, with $9 billion of assets.
"We want to put these funds on people's radar screens," said R. Gregory Knopf, managing director for mutual funds at Unionbancal Corp.
The small-cap fund's performance -- it gained 22.62% for the year, outpacing the Russell 2000, at 19.15%, and the Lipper Small Cap Value Average, at 12.33% -- is cited in promotional literature that was sent to the internal brokerage, outside brokers, and staff members, such as customer service representatives who have contact with prospective mutual fund customers.
The fund is also being brought to the attention of brokers who specialize in employee benefit plans.
"We're going to all our existing plans and asking them to add it to their accounts," Mr. Knopf said.
He said there is a high probability that the fund would at least be considered, because most employee plans have a slot for funds, such as the small-cap product, that are not part of core offerings. "This is a way of adding diversity through a well-managed fund," Mr. Knopf said. Analysts say the strategy of using the fund to attract attention is sound. They said the push reflects the extent to which managers will go to make their offerings stand out in a very crowded market.
"You go with what gives you an edge," Mr. Knopf said. "You need reasons to go back and talk to people."
The small-cap fund's manager, Elizabeth Pearce, said she sought out undervalued companies with strong earnings momentum.
The fund is heavy on technology and consumer stocks, culling 40% of its assets from these sectors. Financial services selections account for 17% of the fund's holdings; bank selections include 20,000 shares of Bank United Corp. of Houston and 120,000 shares of Eldorado Bancshares of Laguna Hills, Calif.
Bank United is appealing for its "smart operating approach" and because it is cheap compared with other thrift stocks, Ms. Pearce said. Eldorado Bancshares' chairman, Robert Keller, has a track record of building profitable banks and then selling them for a premium, Ms. Pearce said.
Because of a subadvisory agreement in which 25% of investments are made in foreign companies, the small-cap fund also includes the Japanese financial service companies Akita Bank, Bank Iwate, and Hido Bank. The fund is also invested in a Peruvian bank, Banco Weise.
