The mutual fund industry seems to think that  marketing gimmicks will work better than simplicity and performance

Sucheta Dalal

The mutual fund industry, which is facing continuous erosion in equity assets for several years now, is clearly worried about its survival. Some desperate measures were discussed at an industry summit in June to meet the objective of ‘reaching out to a larger number of investors’ and focus on ‘investor education & awareness’. The industry believes that its problem lies in the fact that 74% of its market is concentrated in just five cities, so it engaged PriceWaterHouse (PWC) to come up with solutions.

Typical of consulting firms, PWC held out the promise of ‘big opportunity for growth and further penetration’ and offered some neat, if fanciful, solutions that are attractive to companies with spending power but no ideas. PWC’s suggestions were:  to market mutual funds as a ‘concept’; use ‘social media’ to spread the word; and use ‘mobile banking’ which could be a potential game-changer in marketing mutual funds. Let’s examine each of these.

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