Starting in May, as many as 1.5 million private and government employees will have the option of adding a unique new investment alternative to the mix of funds in their retirement plans. That’s when Aetna Retirement Services, which manages employer-sponsored pension plans nationwide, will start offering the Chapman Domestic Emerging Market (DEM) Equity Fund among its list of more than 100 product options — a list that includes mutual fund giants Fidelity and Janus.
The small-cap Chapman DEM fund, which is managed by the Chapman Co., invests exclusively in U.S. companies run by African Americans, Asian Americans, Hispanic Americans and women. Its clients run the gamut from Calumet Bancorp to Donna Karan International. "We’re in a fast-growing niche," says company president Nathan A. Chapman Jr. Chapman already does some pension plan steering of its own, managing retirement plans for Texaco and the cities of Memphis, Tennessee, and Bir-mingham, Alabama.
Under the new agreement, Aetna will offer the Chapman DEM equity fund as an investment option in many of the 401(k), 403(b) and 457 retirement plans it administers. "Where we’ve knocked on doors, Aetna’s kicking them in," says Chapman. Looking ahead, as new Chapman funds are born, Aetna will work with the investment bank to bring the new funds into its family of products. "It’s a true strategic partnership," says Chapman.
For its part, Aetna says the alliance personifies its goal to be on the leading edge of "domestic emerging markets," companies run by African Americans, women and other minority groups. It also gives its investors a chance to tap into the highest-quality emerging market companies. Says Willard Hill, Aetna’s head of emerging markets, "The synergy is a natural one."
Though Aetna is Chapman’s first major partner, the firm’s president is confident it won’t be the last. "We place great store in our Aetna relationship," says Chapman. "But to be successful, we’ll have to develop a number of relationships."
Getting the attention of potential suitors shouldn’t be hard. The strategy of investing in domestic emerging markets — Chapman’s bread and butter — recently attracted another high-profile pitchman. At the Rev. Jesse Jackson’s Wall Street Project conference last January, even President Clinton acknowledged the potential growth within the niche. "The largest pool of untapped investment opportunities and new customers are not beyond our shores," said Clinton. "They’re in our backyard."