Fund is aimed at young investors

May 26, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

SteinRoe Mutual Funds, the Chicago-based investment group, evidently has scored a hit with parents anxious to make sure their children are investment-literate with a new mutual fund aimed at young investors.

Since the company first began taking calls last week, it has been swamped by parents and grandparents asking for prospectuses.

The fund will put at least 65 percent of its money in brand name companies -- like Toys 'R' Us and McDonald's -- that children have heard of, or that are strongly affected by children's purchasing habits. "The idea is to get children more involved with their parents in the process of planning and saving," said Timothy K. Armour, president of SteinRoe Mutual Funds, the fund's issuer. "The financial world doesn't exist for most kids, which is too bad because they can be intrigued if they understand that behind many [stocks] are companies that make things they know about."

Mr. Armour said normally funds take as long as a year to establish a track record before investors show much interest. But the firm is getting between 300 and 700 calls a day for information on the young investors fund, compared with 1,000 calls a day its operators answer for all other company funds combined.

Aside from the investment strategy, the company has also put together instructional pamphlets geared to children from elementary school age to teen-agers.

Not only is the fund geared toward kids, but the funds' managers hope to get new investment ideas from the younger generation.

Mr. Armour said that like the fourth-graders from Aberdeen who just won the Stock Market Game run by the Loyola College Center for Economic Education, the best ideas for investments can come from children's shopping habits. He pointed to Peter Lynch, a legendary fund manager with Fidelity Investments in Boston.

"He used to follow his wife and teen-agers around at the mall and see what they liked," Mr. Armour said.

While an initial $2,500 investment is required to open a standard account, $1,000 is for a custodial account. Additional investments can be as small as $50. Information about the fund is available by calling 1-800-403-KIDS.

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