The streets of Mumbai (and probably even the other streets in various cities of India), are suddenly appearing very colourful. This time it’s not the graffiti painters doing that, but the mutual fund houses trying to build their “brand equity” by promoting their brand name on most of the billboards in the city.

The latest round of promotions has begun with HDFC Mutual Fund and Franklin Templeton Asset Management, persuading investors to invest in their funds. One such advertisement reads — “choose a healthy investment-HDFC Mutual Fund SIP”. The other — “Invest in Franklin Templeton Mutual Fund.” Well, these ads are really done in a very eye-catchy way and there’s nothing illegal about these multi-crore campaigns. But do you know who’s paying for them? - It’s you who is bearing the load of these multi-crore campaigns. One of the mutual fund house at the bottom of its billboard, mentions one of its fund’s name in small font; thus indicating the possibility of the cost of promotion being met from the mutual fund scheme mentioned in the ad.

Even as the regulator - Securities and Exchange Board of India (SEBI) has been working to cut costs for investors, including banning of entry loads, these recent ad campaigns have raised ethical issues. And, it is noteworthy that all mutual fund schemes’ advertisements go through the SEBI before going public.

In our opinion such ad-campaigns (mentioning the lines above) reveals that the mutual fund houses are indulging in “rats race” of increasing their Assets Under Management (AUM) – which in our opinion isn’t wrong; but at the same time we think that there has to be greater accountability, responsibility and transparency while doing so. We think SEBI should take its vigilant steps to protect investors’ interest, and believe that for such ad campaigns, the investors should not be penalised by charging the cost of the ad campaign to the respective fund.

Add Comments

Comments
parhisnehasish@gmail.com Feb 04, 2011 Yes I also agree. SEBI should look into this seriously to safeguard investors.
bkag1946@gmail.com Feb 07, 2011 Dear Sir I agree with your views.No body knows the method of caculation of arriving on NAV'S.AMC'S can deduct advertisement expances from particular Fund? Overall the scenerio is not TRANSPARENT.  Certainly no AMC will manage funds for FREE and I hope ENTRY LOAD is not allowed, but WHO Controls declaration of NAV'S (HOW MUCH EXPANCES ARE DEBITED ) ???? Regards bk
vinugadre@gmail.com Feb 07, 2011 Please see my comments on your write-up regarding Entry Load.
sandeep.raja85@gmail.com Feb 07, 2011 now the time is to promote the AMC IN semi -urban areas, where there is lot of potential for busines, but the lacking part there is no seminars or advt done properly there to generate business
rvpoola@yahoo.com Feb 08, 2011 The Mutual Fund schemes are being treated as consumer goods and this cost (of advertisements) could turn out to be more expensive than the entry charges. Perhaps this will disappear when the new Chairman takes over at SEBI. Who knows? -the Mutual funds may even display such banners "welcoming" the new SEBI chief.

 1 2