Funds seek new markets with multicultural services

Your Funds

January 30, 2000|By Charles Jaffe

A FEW YEARS ago, the mutual fund business was struggling to write paperwork and prospectuses in plain English.

These days, fund companies appear to be working on their Spanish and Chinese.

It's all part of a quiet expansion of the fund industry that has forced virtually every major fund firm to look at how it serves the minority community, and how it can best attack what is expected to be a growing niche of investors.

The result is a positive change, specifically the growth of educational and prospectus materials written in foreign languages. These days, any investor for whom English is a second language has a shot at getting help written or spoken in their native tongue from their fund company, if they ask for it.

"Fund companies see that there is opportunity dealing with customers in Spanish or Chinese," says Geoff Bobroff of Bobroff Consulting, a fund strategy firm in East Greenwich, R.I.

People of Hispanic origin make up about 12 percent of the U.S. population, while Asians account for nearly 4 percent. U.S. Census Bureau figures show that those percentages will grow during the 21st century.

Yet industry observers, pointing to the low demand for fund materials written in Spanish or Chinese, believe that only a small portion of these minority groups buys funds today.

That presents a clear marketing opportunity that seemingly every fund firm is at least considering.

Several fund groups let investors toggle between English and Spanish versions of their Web site. Even more firms have dedicated customer service lines in Spanish or voice-mail prompts that allow a customer to get service in Chinese or Spanish.

Some of this growth is an outcropping of overseas sales. MFS, PIMCO and State Street Research, among many others, have share classes sold entirely in Japan, which accounts for their movement toward providing some multilingual materials.

More of it comes from within U.S. borders, with the expansion of 401(k) and other retirement plan offerings and the need for employers to communicate the details of those plans to a work force that doesn't always speak English.

The change has been helped by the Securities and Exchange Commission mandate that prospectus and statement materials be written in plain English, rather than legalese. The new documents are easy to translate.

"The demand for multicultural, translated prospectuses is clearly on the rise," says Troy Shaver, the executive vice president overseeing sales and marketing at State Street Research. "Employers want it in their retirement plans and a growing number of investors want it because it makes them more comfortable investing."

Many investors don't know of this evolution in foreign-language help. In some cases, the firm that provides 401(k) assistance in Spanish at work does not offer the same help from home on after-tax accounts, largely because many retirement plans use a special class of funds and the retail fund documents have never been translated.

Fund firms also face the cultural difficulty of developing complete support materials, rather than simply translating existing documents into new languages.

For consumers for whom English is a second language, what may be most meaningful is that help is out there for the asking, often even with fund companies that have yet to provide foreign-language materials.

Customers can ask to be connected to a phone representative who speaks their language. Notes Bobroff: "The more investors ask for this service, the more service they will find available in the future. It's still unusual to get help in a foreign language from your fund company, but in a few years it won't be a big deal at all."

Charles A. Jaffe is mutual funds columnist at the Boston Globe.

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