Investors are not brand conscious when it comes to investing in mutual funds.
Contrary to the popular belief that investors prefer to invest in schemes of well-known and large fund houses, a Nielsen survey released recently reveals that six out of ten investors choose schemes regardless of the brand name and size of a fund house.
The study ‘Building the mutual fund market in India: the need for financial literacy’ shows that 59% investors choose schemes that suit their goals regardless of the AMC’s brand name.
“Increased awareness has changed investment patterns. Consumers no longer make their choice on the basis of brand name. They are becoming more discerning about the products and their suitability to their own investment needs. IFAs and regional managers, the points of contact for the consumers, would benefit from increased training to enable them to better address these needs. Also, highlighting fund performance has created a positive perception among investors,” says the report.
Aashish Somaiyaa, Managing Director & CEO, Motilal Oswal Mutual Fund believes that investors consider fund suitability, philosophy and performance while choosing a scheme. “Why should brand be a criteria for buying mutual funds? A mutual fund scheme is completely different from buying any other product and investors have understood it.”
Suresh Sadagopan of Ladder7 Financial Advisories attributes this trend to increasing awareness about fund performances through scheme rating sites, media and advisors unbiased recommendation. “The information provided by media and performance rating websites has helped investors increase their understanding about mutual funds. Also, many advisors don’t have a bias for big brands. They usually recommend products based on performance of the fund irrespective of the brand and size.”
Distributors say that factors like increased awareness among people about mutual funds and good performance of few schemes from emerging fund houses have led to investors looking beyond brands. It remains to be seen whether this trend picks up momentum.
