It
is important to create a well-connected association/bond with
the fund's overall objectives. Branding, however, becomes
a mere cost exercise if the fund house does not deliver the
results that satisfy the needs of its clients, the investors.
The
level of competition is very high among the players. In the
first place, there are limited numbers of brokers who actively
do MF business as against the demand. Then, the brokers are
concentrated in a few cities, mostly in the big cities-metros
and capital cities. Though the fund houses are making continuous
efforts to reach small and medium towns by direct presence
or through intermediaries, the concentration of Assets Under
Management (AUM) is built significantly around 25 major cities.
This is further accentuated by the fact that a majority of
the corpus in any scheme of the fund houses is contributed
by HNIs/Corporates. HNIs/Corporates are tapped through brokers
who are well-connected. Further, projecting through the market
intermediaries that IPOs are a better proposition than investing
the existing schemes, a large numbers of IPOs are launched.
Hence, the competition among the players is to launch more
IPOsso much so that Sebi is contemplating that Mutual Funds
should not use the word IPO for their fresh offering to avoid
confusion in the minds of investors. Many players skillfully
used the past track record of performance in their existing
equity funds and successfully collected more money through
IPOs, particularly in the equity segment. The expectation
of the investors is going to be very high on the performance
front. The major weaknesses of the current competition, as
we see among the players, is that the funds houses are mostly
tapping the same set of investors. As I see, there is more
of selling than any comprehensive marketing of mutual fund
products.
We
need to go to the small towns and cities to spread the investment
culture. Today, many people in small places believe that investment
means investment saving in any guaranteed avenues like NSC/PPF/Bank
FD/Post Office Schemes/Life Insurance. The equity culture
has not really spread in such places. It is difficult for
individuals not connected with the financial markets to understand
it for direct exposure. |
