BOSTON - Scudder, Stevens & Clark Inc. struck a deal with Bankers Trust Co., New York, for index fund management.
Scudder has introduced an equity fund, based on the Standard & Poor's 500 Stock Index, which will invest in an existing Bankers Trust mutual fund in a master-feeder arrangement.
Investing in an existing mutual fund "let us hit the ground running," said Ed Canaday, a Scudder spokesman. "It is extremely difficult to start an index fund from scratch these days because you don't have the economies of scale. This way, we can put the money to work right away and we don't need a true subadviser."
The master-feeder arrangement is a departure from a deal Scudder struck earlier this year when it hired Bankers Trust to subadvise an S&P 500 fund for a family of funds it created for the American Association of Retired Persons. In that deal, Mr. Canaday said, the AARP wanted more downside protection for the fund and Scudder had to provide a more enhanced version of the plain vanilla S&P 500 fund than Bankers Trust offers in the master-feeder form.
MFS dumps subadviser
BOSTON - MFS Investment Management dropped Foreign & Colonial Emerging Markets Ltd., Boston, as subadviser of two of its mutual funds, the MFS/Foreign & Colonial International Growth Fund and the MFS/Foreign & Colonial Growth and Income Funds.
Foreign & Colonial will be dropped from the name of each fund.
The MFS International Growth Fund will be managed by David Mannheim, who also manages the MFS World Equity Fund. The MFS Growth and Income Fund will be managed by Frederick Simmons, who also manages the MFS World Total Return Fund. The MFS managers replace Ian Wright and June Scott of Foreign & Colonial.
While MFS officials would only attribute the manager change to improved in-house capabilities, the performance of the funds has not been good recently.
The International Growth Fund returned 3.81% for the year-to-date as of Aug. 31, putting it in the 95th percentile compared with peer funds, according to data from Morningstar Inc., Chicago. The fund's one-year return for the period ended Aug. 31 was 3.35%, also putting it in the 95th percentile.
The International Growth and Income Fund fared similarly. Its year-to-date return was 0.57%, putting it in the 93rd percentile and its one-year return as of Aug. 31 was 3.07%, resulting in a 95th percentile placing.
Foreign & Colonial will remain the subadviser, however, of the better-performing MFS/Foreign & Colonial Emerging Markets Fund. That fund had a 19.03% return year to date and 22.76% for the 12 months ended Aug. 31, putting it into the 16th and eighth percentiles, respectively.
Vanguard cuts index fund fees
MALVERN, Pa. - The Vanguard Group of Investment Cos. lowered transaction fees on four indexed mutual funds, a move aimed primarily at retail investors.
The fees for the Vanguard Index Trust-Extended Market Fund, the International Equity Index Fund-European, the International Equity Index Fund-Emerging Markets and the Vanguard Total International Fund, were dropped 15 to 50 basis points.
George U. Sauter, managing director, said in a statement that transaction costs have declined as a percentage of gross purchases because of the growing size of the funds and the modest redemption rate.
The move is the second time this year Vanguard has lowered transaction fees on passive funds. In January, fees were lowered on the Small Cap Stock, International Equity-Pacific Portfolio and on the Emerging Markets and Total International funds.
Vanguard also stopped providing net asset figures for its mutual funds on a daily basis and will only do so monthly in future. Company officials said daily asset valuation ran counter to the company's philosophy and emphasis on long-term investing.
Global investing on the Web
SAN FRANCISCO - The Charles Schwab Corp. is one of the earliest companies to offer international investors access to a mutual fund supermarket and has made the service even easier to use via the Internet.
The Charles Schwab Mutual Fund Trading Center at www.schwab-worldwide.com gives customers of Charles Schwab Hong Kong Ltd. and Charles Schwab Cayman Ltd. online access to 190 mutual funds from families such as Morgan Stanley, Goldman Sachs, Scudder, Stevens & Clark, INVESCO, Putnam Investments, Alliance, Federated Investors, Franklin Templeton, Bankers Trust and GT Global.
Web site users also can find interactive fund performance and fund information on the site.
Brinson pushes for retail
CHICAGO - After building a $131 billion asset management business mainly by catering to institutional clients, Brinson Partners Inc. will expand sales efforts to high-net-worth individual investors in January.
To that end, the Chicago-based money manager has struck agreements with Merrill Lynch & Co., Smith Barney Inc. and PaineWebber Inc. to begin offering Brinson's stable of seven no-load institutional mutual funds through the national brokerage firms' 30,500 brokers.
Earlier this year, Brinson expanded its push into the retail market by hiring Boston-based Funds Distributor Inc. to market to financial planners and brokers.
*Nicholas-Applegate, San Diego, introduced two mutual funds Sept. 30: the Emerging Markets Debt Fund, managed by Malcolm Day and Jan Freidling, and the Global Blue Chip Stock Fund, which is managed by a team of staff members in company offices around the world. The emerging markets bond fund will only be available to institutional investors for the first six to 12 months.
By the end of November, Nicholas-Applegate will introduce the Pacific Rim Fund, the Greater China Fund and a Latin American equities fund, said Catherine Somhegyi, chief investment officer, global equity management.
*American Century Investments, Kansas City, Mo., will introduce three fund offerings. John Schneidwind and Kurt Borgwardt will manage the VP Income & Growth Fund for use in variable annuity programs. The pair manages a similar fund, the American Century Income & Growth Fund. The VP fund will be available in the next month.
The Emerging Markets Fund will be American Century's first in the asset class, and will be managed by Mark Lipinski and Mark Donnelly. Bud Hoops and Therese Fennel will manage the company's first High Yield Bond Fund. Both funds await SEC approval.
*Franklin Templeton Distributors Inc., San Mateo, Calif., introduced the Mutual Financial Services Fund. The fund invests primarily in the stocks of financial services organizations, such as banks, insurers, credit card companies, investment managers and sub-prime lending institutions. The fund is the sixth in a series of funds managed by Michael Price and his associates at Franklin Mutual Advisers, a subsidiary of Franklin Templeton. The fund will be team managed, led by Raymond Garea.
*When Phoenix Duff & Phelps, Hartford, Conn., completed its acquisition of Engemann & Associates, Pasadena, Calif., besides six new mutual funds, it also gained six wholesalers. The new field representatives join Phoenix Duff & Phelps' 17 wholesalers. The expanded distribution system will also push Phoenix Duff & Phelps' existing line of 23 mutual funds to the intermediary market.
The company also launched two new funds, which expand the company's breadth of asset class offerings. The Phoenix Growth and Income Fund is PDP's first value fund and is managed by Steven Colton and Dong Hao Zhang, who were hired as a team in June from American Century.
The Phoenix Core Equity Fund will be managed by Diane Mustain, a 17-year veteran of the company and the manager of an institutional portfolio using the same strategy.
*The newest fund-of-funds by Charles Schwab & Co. Inc., San Francisco, - the OneSource Portfolios-Small Company Fund - ended its subscription period with more than $165 million in assets, making it Schwab's most successful mutual fund launch to date. Overall, the three funds in Schwab's OneSource Portfolios series have $425 million.
The Small Company Fund invests mainly in no-load small company mutual funds from Schwab's Mutual Fund OneSource service.
*Mesirow Asset Management Inc., Chicago, will form a general limited partnership to offer small-capitalization value equity management by the end of the year and eventually will launch a mutual fund using the strategy. Mesirow needs to offer the small-cap strategy in a commingled vehicle to accommodate endowments, foundations, defined benefit and defined contribution plans too small to afford a separate account, said Kenneth S. Grossman, executive vice president.
The small-cap fund will be Mesirow's re-entry into the mutual fund arena; it sold its Skyline equity mutual funds to Affiliated Managers Group, Boston, in 1995.
*Berger Associates Inc., Denver, launched the Berger Balanced Fund, its most conservative fund. The fund's managers, Patrick Adams and John Jares, will have flexibility to allocate from 25% to 75% of the fund's assets into midcap and large-cap equities.
*Eaton Vance, Boston, introduced Eaton Vance Tax-Managed Emerging Growth Fund, which is managed specifically to maximize the after-tax returns. Portfolio manager, Jack Smiley, will take a buy-and-hold approach to the low-yielding stocks he selects, which will generate little, if any taxable income. Portfolio turnover will be held to less than 10%.
*PIMCO Funds Distribution Co., Stamford, Conn., launched the PIMCO Emerging Markets Bond Fund, available to both retail and institutional investors. Michael Rosborough is the portfolio manager. The firm also introduced two mortgage-backed funds, the PIMCO Total Return Mortgage and PIMCO Low Duration Mortgage Funds, exclusively for institutional investors. The three funds will be managed by Pacific Investment Management Co., Newport Beach, Calif.
Michael Fritz contributed to this column. Christine Williamson can be reached by e-mail at [email protected]