Marketing Financial Products


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Marketing Financial Products Textbook | Courseware

Mutual Funds - Chapter 10

Mutual funds in India have come of age to cater to the needs of investors. SEBI, which also controls the stock market operations, is the regulatory body of the Indian mutual fund industry. Mutual funds can be classified into open-ended funds, close-ended funds, and interval funds, based on the fund structure. Based on the investment objectives, they are divided into growth funds, income funds, balanced funds, and money-market funds. Based on the specific purpose of use, mutual funds are classified into tax savings schemes, index funds, and theme-based funds (including industry-specific or sectoral funds). Many fund marketers have come out with innovative and customer friendly products that aim at satisfying the investors'financial goals. Systematic Investment Plan (SIP) is an innovation in payment option for mutual fund investors. It is designed for those who are interested in gradually accumulating wealth in a disciplined manner over a long term. Mutual funds are priced based on their net asset value, which the fund houses declare on a daily basis. Investors can sell their units back to the fund at the prevailing NAV.

Some funds attract entry and exit loads. Such loads are used to recover the costs spent on distribution and other marketing costs. Mutual funds are distributed through five channels of distribution, namely, direct channel, advice channel, retirement plan channel, fund supermarket channel, and institutional channel. Apart from these channels, mutual banking is also adopted, where cross-selling is used in association with banks to sell the fund schemes through the banks'branches.

Mutual fund marketers use advertising, sales promotions, brand communications, and public relations to attract investors and to increase their sales. Advertising includes print and electronic media, including the Internet. Fund marketers give away incentives and gifts to the investors for investing in their funds and such incentives and gifts may act as a catalyst for attracting more sales. They also give incentives (in cash or kind) to their trade partners and their representatives.

Further, the fund houses have started the process of overhauling their brand image to promote themselves more effectively to the customers. AMFI, the industry association, has been actively involved in public relations (PR), by promoting the mutual fund industry, both at the domestic level and in the international arena.

Chapter 10 : Overview

Evolution of Mutual Funds in India
Organizational Set-up of a Mutual Fund

Types of Mutual Funds
Classification Based on the Structure of the Mutual Fund
Classification Based on the Investment Objectives
Classification Based on Specific Purpose

Innovation and New Fund Launches
Designing a Mutual Fund Product
Systematic Investment Plan (SIP)
Factors Influencing New Fund Launch

Terms in Pricing
New Fund Pricing

Types of Distribution Channels
Cross-selling through Mutual Banking

Sales Promotion
Public Relations (PR)