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Hug a portfolio manager
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August 14, 2000: 5:55 a.m. ET
Access to top guns in your funds is growing, but is it a good thing?
By Staff Writer Jeanne Sahadi
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NEW YORK (CNNfn) - Art Bonnel knows the value of pressing the flesh to promote his fund, U.S. Global Investors Bonnel Growth. But he may have gotten more than he bargained for when a little old lady came up to him at an investment conference last year and said, "Bend over. I want to give you a big hug."
The six-foot-tall Bonnel did as he was told and then, again upon request, autographed her prospectus. The woman, a shareholder in his fund, just wanted to thank him for making her money.
Bonnel, like many fund managers these days, has learned that stock-picking, while still the most important part of his job, is not his only responsibility. Making himself more accessible - to financial planners, the media and investors - is a critical part of doing business.
Between engaging in Internet chats with the public, attending retail investor conferences, giving interviews and having one-on-one dinners with financial advisers and reporters, Bonnel figures that on average he spends about 20 percent of his time on marketing activities. But, he stressed, he doesn't let them interfere with his investing responsibilities, particularly during critical periods such as earnings season.
Trend toward greater access
Of course, don't expect the investing stars from big-name houses such as Fidelity and Janus to make themselves as accessible as Bonnel. And there certainly are firms that tightly restrict how often and where their managers appear publicly, while others purposefully don't raise the profile of any one manager, said mutual fund consultant Burt Greenwald.
 But the trend in the industry is toward greater access overall, experts say.
"The mutual fund industry is maturing so competition is extremely high," said Dennis Gallant, consultant at Cerulli Associates, a financial services consulting firm.
As the race for assets grows fierce and investing information outlets proliferate, many fund firms, particularly the smaller houses, are sending out more of their high-performing portfolio managers to gather the faithful among retail investors and their advisers.
"At the boutique firms, it's a way to get recognized," said Morningstar analyst Scott Cooley.
A necessary part of the job
Some portfolio managers themselves acknowledge that marketing is a necessary - and growing -- part of their job.
"It's not why I'm in the business. ... It's not something I relish. ... I do it because it obviously is part of the whole process. It has to be done at some level to support the business," said John Leo, portfolio manager of the five-star Northern Technology Fund.
 Leo said on average he probably doesn't spend more than 5 percent of his time on marketing activities, but acknowledged that there are weeks when it's more. All told, he said, "It's not insignificant."
Mark Edwards, the lead portfolio manager for two Potomac enhanced index funds, figures he devotes about 15 percent of his time toward promotional activities, which include the occasional one-on-one phone call with a fund shareholder.
Engaging the distribution channel
But more important than gaining recognition among retail investors is gaining the recommendation of fee-only financial planners and brokers who account for a significant portion of fund distribution. That's why, industry watchers say, many portfolio managers will join fund wholesalers on some of their road shows and go to conferences targeting advisers.
"Intermediaries are now looking under the hood," Gallant said, questioning portfolio managers about their stock picks and investment strategies so they can better advise their clients on asset allocation.
Does it hurt your investments?
A concern that some raise about the manager-as-spokesman model is whether time spent away from the fund hurts the fund.
In some ways, Edwards said, that's like "saying you can't chew gum and walk at the same time."
He acknowledges that time spent in an online exchange or at a conference "takes away from a lot of things. But it's good to see what's on people's minds," he said. And it helps the company come up with new products, he added.
 What's more, most funds have research and trading teams supporting a manager, and a number of funds structure things so that if a portfolio manager gets run over by a truck, the fund returns won't necessarily suffer, said Charles Githler, chairman and co-CEO of InterShow, which produces a series of investing conferences including The Money Show, investment cruises for high-net worth individuals and portfolio management symposiums for financial advisers.
Does it affect who gets hired?
In some ways, industry insiders say, some of the marketing that managers do today is really an extension of what they've always done: make presentations to institutional shareholders. And while they acknowledge that marketing responsibilities have increased in the past 10 years, they say that for most managers they don't take up more than a couple of hours a week.
But talking to the media and to retail investors is different than talking to institutional shareholders. And not everyone is a born public speaker.
That begs the question whether the media savvy manager who comes off well in front of an audience will get preference over one who doesn't in the hiring process.
Experts agree that investing acumen is still the top job qualification for any portfolio manager.
But Leo acknowledges that a "demonstrated ability to make an impact on the speaker's podium or in the media" is more important today than it was five years ago and that promotional skills "seem to be an important part of the evaluation process."
Cooley put it a little more bluntly, "It's harder to be the kind of investing nerd who sits in his office and picks stocks."
But rest assured, Greenwald said, "the ability to pick stocks is the important criteria."
Who benefits?
At the end of the day, the push for more public exposure - whether through the Internet, the conference circuit or the media - may well benefit the fund companies and shareholders alike.
"There is something to be said for having well-informed shareholders," Cooley said, noting that an investor who is informed about a manager's style is more likely to stick with him or her during a down period in the market.
 And assets that stick are assets fund firms like, particularly if they have a number of high net-worth clients who pour hundreds of thousands of dollars into a fund. Those are the kind of potential shareholders who are willing to pay $12,000 to $15,000 for a cabin on an investment cruise sponsored by InterShow.
The opportunity on those cruises to speak to a fund manager and question him or her about investing strategy builds an understanding and sense of familiarity that can't be gotten by reading a prospectus or checking a company's Web site.
"There's a much greater bond between the portfolio manager and the individual shareholder," Githler said.
Retail shareholders with less than a mint to invest may also benefit when they see that their fund manager has made the effort to address investors like them and answer questions of concern at conferences or in online chat rooms.
"A lot of people like to know who really is managing the money," Bonnel said.
And fund managers may enjoy greater job security if they hone their ability to keep assets under management. However they feel about leaving the office to wow the crowds, "If they want to compete, it's in their best interest to promote the fund," Gallant said. 
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