MUTUAL FUNDS

KAUSHIK RAJA
Pondicherry University MBA

What is Mutual Fund

A Mutual Fund is an
investment tool that allows
small investors access to a
well-diversified portfolio of
equities, bonds and other
securities.

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 segments
1) 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 their

products
Certified Agents [Sale and

Distribution] - Certification
from the National Institute
of Securities Market (NISM)
by passing their certification
examination 'NISM Series VA : 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

Thomson Reuters & Lipper

NDTV Profit

Morning Star

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

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 voiceover reiteration.

Why people dont invest

in Mutual Fund in General
1) Ignorance
Nine in ten people with
incomes in India do not
know that mutual funds
exist.
If people came to know
then 1 in 5 people invest
in Mutual Fund
2) Averse to risk taking

3) AMCs and
distributors have
a limited focus
beyond the top 20
cities
4) No distinction
between Mutual
Funds and direct
stock market
investments

5)The Indian mutual fund

industry has largely been
product-led and not sufficiently
customer focused.
6)The industry has had a
limited focus on innovation and
new product development
Products that cater specifically
to customer life stage needs
such as education, marriage,
and housing are yet to find
their 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 company's largest equity mutual fund
is Contrafund, which has more than $68
billion in assets
FIL's offices include asset management
companies in 10 locations
offices in 23 countries, employing more
than 4,000 people

Why Fidelity
At Fidelity you are with a
leader:
Morningstar Highly

rated Funds
No load, no
transaction fees
Guidance with free
portfolio planning

How It Works

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 Fidelity's

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.

Reference

www.piperjaffray.com/pdf/understandingmu

tualfundpricing.pdf
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1713940
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1474955
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1472156
http://papers.ssrn.com/paper.taf%3FABSTRACT_ID%3D239851
http://www.mutualfundsindia.com /
www.pwc.com/in/en/assets/pdfs/ industries/towards-2015
-141211.pdf
www.mutualfundsummit.com/image/pdf/MF_09_Brochure.pdf
www.kpmg.com/in/en/.../pages/indianmutualfundindustry
.aspx
http
://shodhganga.inflibnet.ac.in/bitstream/10603/687/9/09_chapter
1.pdf