An effort to stand out from crowd


November 07, 1999|By Bill Atkinson

MONUMENT Funds Group Inc. has discovered that starting mutual funds is like trying to get shelf space in the beer aisle at the local liquor store. There are just too many kinds of funds to choose from.

The company, formed two years ago in Bethesda, offers three mutual funds. But it is fighting to distinguish itself from hundreds of competitors that, combined, offer about 7,300 funds.

Monument has been forced to reassess its strategy. Initially, it had hoped to attract investors by offering funds that had shares in large and small companies in the Baltimore- Washington area.

Though returns were strong, the funds were largely ignored, because Monument lacked a track record and marketing muscle.

" `Tough' is an understatement," said Alexander C. Cheung, senior portfolio manager at Monument. "Even though we had good success in terms of investment returns, unfortunately the marketing side just hit a brick wall."

Monument acted in May, converting its big-cap fund into the Monument Medical Sciences Fund. Last month, its small-cap fund became the Monument Telecom- munications Fund.

It also abandoned the idea of focusing on companies in the Baltimore-Washington region.

"It is all about performance history," said Rami Shaalan, a fund analyst at Wiesenberger, Tompson Financial, a mutual fund tracking firm based in Rockville. "Fidelity just rolls out a fund, their name backs them up. The bigger the fund family is, they definitely have a competitive advantage."

Cheung said he thinks Monument is on the verge of making its name known in the industry.

A year ago, it started the Monument Internet Fund, and money has streamed in. The fund has $65 million in assets under management, much more than the $1.5 million managed by the medical sciences fund and the $1 million is in the telecommunications fund.

"Obviously, it has been a good year," Cheung said. "It could be better."

The Internet fund, which turned a year old Thursday, was up 216 percent since its inception, according to the company.

"The Monument Internet Fund is one of the top-of-the-charter performers, that is a fact," said Shaalan.

Cheung said he thinks the Monument Internet Fund is proving itself.

"We have delivered the results to people," he said.

He said he expects the Internet to become a major segment of the nation's economy. A study by the University of Texas estimated that Internet companies have created 400,000 jobs during the past 12 months and generated $108 billion in revenue during the first quarter of the year.

"In 10, 15, 20 years, the Net could be the engine of growth for the world economy," Cheung said.

"The Internet is going to be bigger than the technology sector," he added.

Cheung said the Internet will become a focal point for business transactions.

"People will be trading a bushel of corn or a barrel of oil" on the Internet, he said. A company in Korea might use the Internet to seek out a supplier of scrap metal, he added.

The Monument Internet Fund has about 60 companies in its portfolio that generate at least 50 percent of their revenue from the Internet. Holdings include America Online Inc., BroadVision Inc., CMGI Inc. and DoubleClick Inc.

It also invests in a number of companies based in the Baltimore-Washington region, including MCI WorldCom Inc., PSINet Inc. and Network Solutions Inc.

If there is a knock against the fund, it's that it has an upfront sales fee of 4.75 percent, which means it charges $4.75 for every $100 invested.

But Cheung said the fund has issued class "B" shares, which reduce and eventually waive the sales charge the longer an investor keeps money in the fund.

The sales charge apparently has done little to hurt business. "We are definitely on the right track," Cheung said.

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