Silesia fund opens for corporate clients
Money market funds are feeling the pinch of increasing competition and diminishing worldwide profit, forcing them to look to more diverse opportunities for investments.
In Poland, the Katowice-based Upper Silesian Fund Management Co. (GTFI) is the first fund of its kind to bypass Warsaw and sell money market and treasury bond funds in Katowice.
Ever since the floor fell out of the overpriced Warsaw Stock Exchange in 1994, leaving many Poles with their first lesson in the risks of investing, the enthusiasm for funds even the non-equity varieties has never been the same, said Piotr Oskroba, director general of AIB WBK Fund Management Co.
"People remember 1994," said Lukasz Piasta, public relations manager for the Skarbiec Fund Management Co. "That's why they don't like investing in funds."
But GTFI is trying to overcome such caution by promising higher returns and liquidity to individual investors and company financial directors. Above all, the fund wants to reassure wary investors that the tough times are over. "(Customers) want service. They want convenience. They want security and they want liquidity," said Jakub Wiktorek, GTFI's marketing director.
Wiktorek insists that a mutual fund is more secure than a bank account because it's a separate legal entity from its management company. Also, he said, when funds are investing in government and treasury-backed debt instruments as are two of GTFI's funds an investment is relatively secure.
GTFI, which is owned by the Katowice-based FG Capital and brokerage house Elimar, has three funds on offer: a treasury money market fund with a zl. 50,000 minimum investment, a treasury bond fund with a zl. 10,000 minimum and a commercial papers money market fund for those willing to invest at least zl. 50,000.
The GTFI management team told the press last week in Warsaw that it believes the fund has a competitive edge in the market as most other fund management companies are geared toward minimum investments below zl. 10,000.
Fund management fees at 1.1-1.3% also make the GTFI funds competitive in a marketplace in which 3-5% management costs are not unusual. Wiktorek said GTFI's low-cost, streamlined operational structure is based on a U.S. model in which bureaucracy is minimal and about everything else accounting, asset management, etc. is outsourced.
However, analysts said other funds in Warsaw offer a range of investment vehicles to individuals and institutional investors in every price range and with varying service fees.
Skarbiec, Poland's second-leading fund management firm with a 21% market share, offers a Skarbiec Kasa 2 investment fund, Piasta said. Kasa 2, which is similar in structure to GTFI's premium money market fund, was designed for institutional investors able to make an initial investment of zl. 100,000. Management fees on the no-load fund amount to 0.4%, he said.
CA IB Investment Fund Co. offers almost exclusively funds for institutional investors, with only one available for the smaller investor.
Though GTFI sees its focus shifting to Warsaw-based investors when it opens an equities fund next year and a hi-tech oriented venture capital fund later, the intention now is to put faith in Silesia as a place where hi-tech, internet and blossoming new-economy companies will provide a client base.
The aim is "to show that Silesia is not only a region of coal mines and bankrupt steel mines," Dyduch said. "We are here for the region."
GTFI's three funds have gradually gained value since they were launched on Aug. 31. Each trades at nearly zl. 101, 0.03-0.04% above issue prices.
Piasta said mutual funds found eager takers in Poland in the early 1990s before the losses in 1994.
In the early days it was Pioneer and Korona funds dominating the market, he said. Now, it's Pioneer, Skarbiec and many other smaller funds.
And the market is growing again. By last month, zl. 4.66 billion ($1.03 billion) resided in funds, of which zl. 1.24 billion ($275 million) was in Pioneer funds, Piasta said.
That compares to zl. 4.16 billion ($924 million) at the end of July, zl. 3.9 billion ($866 million) for June and zl. 3.15 billion ($700 million) at year's end 1999.
