Come Ferbruary, every fund house worth its NAV comes up with a hoard of ELSS / Tax planning mutual fund offerings and promotions. These days you open any (business) magazine and you see atleast a dozen ads on how MFs can save you Rs. 33,360* or something on taxes. First up the claim that they can save so much tax itself is based on some unrealistic assumptions. But we are going to talk about something more today.
“Why do mutual funds position themselves like a herd of sheep?”
To quote Vysper Lynd from Casino Royale, “Even accountants have imagination”, but Indian fund managers (houses) seem to have lacked the imagination to get a slice of unit holders mind (pocket). How else can you explain the same “save tax, get returns” tripe literally everyone is shelling out?
As you can see if we plot various products and services on a space with Product / Service type on one axis and value on the other, MFs/Insurance products comeout as high valued commodities. They are comparable with Saloon or Public transport options on product differentiability. (mind you, i am considering only funds by top performing, well established houses like SBI, HDFC, UTI etc.)
I think MFs can do much more to differ themselves from each other. I know investing in equities is still not a hot favorite for most of the semi-urban, rural India for lack of comprehension of the investment concepts and distance from technological advances like internet and demat. Also tax planning is often not done by these people either because they earn very little or their incomes are not tracked (no TDS or paid in black)
So we can safely assume that MFs are targeting salaried / self-employed people mostly located in metro/cities with sufficient understanding of the offerings and various investment avenues.
Now, sometime back even before I could get my online trading account and PAN I wanted to start an SIP and went to several websites. Finally I called up SBIMF phone numbers in chennai and asked them how I can start an SIP for some of their funds. They sent a person to my office, but to my surprise he is not from SBI-MF, but from some broking house. He gave me application forms and finally took ECS clearance from me. That was the last I have seen or heard from them. I keep getting monthly statements, but I would certainly prefer a better way to track the investment progress and an easier way to buy the funds. Not that SBIMF doesnt have an online part for that, but its pathetic to say the least.
So there goes No. 1, the fund houses can be much more tech/mobile savvy by creating a snappy web site with easy way to do better financial planning and hassle-free investments. Hardly any mf seem to focus on this space.
No. 2 could be “no advertising policy”. For one advertising budgets have to come from fund management expenses (which are generally 1-2%) and the more number of ads you see, the more of investors money is gone useless.
I think recently Reliance MF did fiddle with the positioning and launched a mid cap fund with a Debit card attached to it so that you can redeem units once every month from any of the HDFC atms. I think the concept is innovative even though I am not sure about the modalities.
Hopefully some fund house marketers read this and launch their funds with investor friendly positioning.
My name is Chandoo. Thanks for dropping by. My mission is to make you awesome in Excel & your work. I live in Wellington, New Zealand. When I am not F9ing my formulas, I cycle, cook or play lego with my kids. Know more about me.
Thank you and see you around.
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