MUTUAL FUNDS KAUSHIK RAJA Pondicherry University - MBA
What is Mutual Fund A Mutual Fund is an investmenttool that allows small investorsaccess to a well-diversified portfolioof equities, bonds and othersecurities.
Why Mutual Fund Expertise Diversification HISTORY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank.
Segmentation Two segments1) Do-it-yourself - Portfolio Management [software that improves trade execution, hiring skilled analysts]2) Broker services – [hiring client service personnel dedicated to supporting broker inquiries, less in portfolio management ]
How companies promote theirproducts Certified Agents [Sale and Distribution] - Certification from the National Institute of Securities Market (NISM) by passing their certification examination NISM Series V-A : Mutual Fund Distributors Certification Examination. Service Centres Company web portal Little promotion in print media
Outdoor advertising through large size Bill Boards/Hoardings Retail Bank - the reputations of the banks were also stated to have played a key role in popularizing Mutual Fund 90% of the customers said that they would prefer to buy Mutual Fund Products from banks due to existing personal relationship with banks.
Awards and Ratings CNBCTV 18 – CRISIL ICRA – Indian Credit Rating Agency
SEBI Guidelines Refrain from using exaggerated or unwarranted claims, superlatives and opinions While advertising pay- out of dividends, it shall be disclosed that after the payment of the dividend
FORMS OF ADVERTISEMENTS Tombstone Advertisement: A fund which is already launched and is in existence Allowed - Name of the mutual fund, Assets Management Company, Scheme classification (i.e. income/growth etc.,), Logo or trademark, Invitation to inquire for further information, Entry and exit loads. Prohibited - Performance of the fund, Promise of any returns, Comparisons and usage of ranking given by a third party.
Product Launch Advertisement: Launch and re-launch of funds/schemes Must Have – Name of the Fund, the Asset Management Company, Scheme classification (i.e. income/growth etc.,), Investment objective, Investor benefits, general services offered, Logo, corporate symbol, if any, Risk factors as stated in the offer document, Entry and exit loads applicable. Prohibited - Performance figures of any of the previous schemes, comparisons with any other funds/schemes, and rank by any ranking agencies.
Advertisements through Hoardings / Posters “Mutual Fund investments are subject to market risks, read the offer document carefully before investing”. The above statement shall be displayed in black letters of at least 8 inches height or covering 10% of the display area, on white background.
Advertisements through Audio-Visual Media “Mutual Fund investments are subject to market risks, read the offer document carefully before investing” Shall be displayed for at least 2 seconds Covering at least 80% of the total screen space and accompanied by a voice- over reiteration.
Why people don’t invest inMutual Fund in General1) IgnoranceNine in ten people withincomes in India do notknow that mutual fundsexist.If people came to knowthen 1 in 5 people investin Mutual Fund2) Averse to risk taking
3) AMCs anddistributors have alimited focusbeyond the top 20cities4) No distinctionbetween MutualFunds and directstock marketinvestments
5)The Indian mutual fundindustry has largely beenproduct-led and not sufficientlycustomer focused.6)The industry has had alimited focus on innovation andnew product developmentProducts that cater specificallyto customer life stage needssuch as education, marriage,and housing are yet to findtheir way in the Indian market.
7)Limited Focus of the Public Sector Network on Distribution of Mutual Funds.8)Regulation of Mutual Funds than its competing products ULIPs which are deemed to be competing products do not have the mandatory PAN requirement. While the payment for investment into mutual funds can be made only through banking facilities, the purchase of ULIPs can be undertaken through cash.
9) Mutual fund industry in US spends $6 billion a year on advertising. Mutual fund industry in India spends around 200 crore rupees on advertising. Reason: Institutional segment comprises more than 60 % AUM (Assets Under management) share
CASE STUDY:Fidelity Investments It was founded in 1946 and serves North American investors. The companys largest equity mutual fund is Contrafund, which has more than $68 billion in assets FILs offices include asset management companies in 10 locations offices in 23 countries, employing more than 4,000 people
Why FidelityAt Fidelity you are with a leader: Morningstar Highly rated Funds No load, no transaction fees Guidance with free portfolio planning
Personalization Help Americans assess their financial situations and map out a savings plan based on their specific needs and goals.
Marketing Campaign - Turn Here The new campaign, created by Fidelitys internal advertising agency in partnership with Boston- based Arnold Worldwide
Fidelity Charitable Independent Public charity Since 1991, Fidelity Charitable has helped donors support over 150,000 non profit organizations with more than $12 billion in grants. Fidelity Charitable donors made more than $1.3 billion in 2011.