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28 July 2008
Mumbai, India
Mutual Funds (MF) have become a much sought after investment option for Indians in recent times. According to the latest Nielsen Mutual Fund Brand Health Monitor 4, which gauges consumer attitudes toward Mutual Funds and provides insights on the possible drivers for the category, as high as 90 percent of investors put their bets on Mutual Funds last year, driving an increase in the share of Mutual Fund investments in overall investment portfolios from 34 to 40 percent. In addition, the profile for Mutual Fund investor has become much younger, with males in their mid 30s – rather than in their early 40s - investing in Mutual Funds. Investors largely fall under SEC A and have an average monthly income of Rs.30,000.
“The marketing efforts of Mutual Fund AMCs (Asset Management Companies), coupled with the media coverage the sector has enjoyed, have contributed to their increasing popularity as an investment option,” said Kalyan Karmakar, Associate Director, Customized Research, The Nielsen Company. “We are now seeing a change in mindset, where investors previously regarded Mutual Funds as a tax saving option but are now buying them in the hope of greater financial return as a result of the whopping rise in Sensex bringing greater profit to many investors last year.”
The high returns and ease of operating in the equity market take precedence over tax benefits as the key reasons for investing in a Mutual Fund. Even with the drop in Sensex, equity funds at 53 percent have the highest share of future mutual fund investments.
Brand Saliency and Consumer Preference
Of the 33 brands in the Indian market today, just over half (17 brands) are well-known among investors.
The brands that scored high on Saliency or Awareness also scored well on Ad Saliency or Ad Awareness. As the Nielsen Mutual Fund Brand Health Monitor reveals, the main source of awareness for Mutual Funds is Newspapers followed by Television, Magazines and Outdoor advertising. Along with advertising, funds from trusted and established banks are a future investment preference for consumers.
While advertising is important, personalised communication is even more critical when it comes to investments, which is a very personal decision. Below-the-line activities allow fund owners to connect with investors on a one on one basis.
“Our studies show that word of mouth holds a lot of weight with consumers when it comes to investment decisions, and for new investors in particular, the reputation and advice of a financial advisor carries quite a bit of weight. Marketers would do well to focus activities around making financial planners aware of their presence.” added Karmakar.
Brand Equity and Drivers
According to the Nielsen Mutual Fund Monitor, Indian investors care more about the Fund’s commitment to the Indian market than its international heritage. It is the awareness about the fund and positive brand associations in terms of fund performance and trust that drive the Mutual Fund category.
The total awareness has remained constant across most of the MF brands. Reliance has replaced UTI to emerge this year as No.1 in terms of top of mind awareness (22% vs. 13 % last year). One third of the respondents hold Reliance MF as their current investment. Following Reliance are ICICI Prudential, SBI and HDFC. Last year UTI and SBI were the preferred choices for investment, while this year Reliance and ICICI Prudential have taken the slots.
“Players such as Reliance and ICICI Prudential have managed to associate their funds with arket-linked returns moving away from previous positioning for MF to be a tax saving option and the effort seems to be paying off,” said Karmakar.
Potential Mutual Fund Investors
The Nielsen Monitor also looks into non-MF investors’ intention to invest in Mutual Funds and found that the profile of the prospects is very similar to existing MF investors – they are risk-aversive, invest in traditional avenues like Life Insurance, Bank Deposits and PPF, but the buoyant stock market has attracted them to invest in shares this year for greater returns of a shorter duration. On an average, intenders would consider more than 3 MF brands.
“The leading players need to invest a significant amount in educating potential investors to attract them into the mutual fund world. But their task is getting easier, given the increasing wareness of MF as an investment option,” said Karmakar.
About the Survey
The Nielsen Mutual Fund Brand Health Monitor-4 interviewed a total of 1,600 investors (Mutual Fund investors, those having an investment in any mutual fund and Non Mutual Fund investors, those not having an investment in any mutual fund but planning to invest in MF in next 12 months + should have invested at least Rs.10,000 in the past 12 months in other financial instruments such as life insurance, FDs, shares/debentures), including working men and women aged 25-60 in SEC A1+, A1, A2, and B1.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing information (ACNielsen), media information (Nielsen Media Research), online intelligence (NetRatings and BuzzMetrics), mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters inNew York, USA. For more information, please visit, www.nielsen.com.
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