marketing of mutual funds in pakistan: opportunities & challenges by sohail yaqoob
TRANSCRIPT
Marketing of Mutual Funds in Pakistan:
Opportunities & Challenges
By
Sohail Yaqoob
History of Mutual Funds in Pakistan
1962 - Government of Pakistan established NITL which launched first Open End Equity Fund in Pakistan – NIT
1966 - Government of Pakistan established ICP which launched series of Closed End Funds (25).
Only in the Mid 90s, the sprouts of mutual funds is witnessed
1994-95 - More funds launched in private sector
2006 - Total number of AMCs are 30 managing 56 mutual funds
Total Industry Size - Rs. 171 billion
(US$ 2.83 billion)
Total number of Funds - 56
Total number of AMC - 30
Open end Rs. 129.73 bn
Closed end Rs. 41.33 bn
Open end 34
Closed end 22
Public Sector 1
Private Sector 29
Mutual Funds Industry in 2006
Major Market Players
National Investment Trust Ltd.
JS ABAMCO Ltd.
Arif Habib Investment Management Ltd.
Al Meezan Investment management Ltd.
Atlas Asset Management Ltd.
UBL Fund Managers Ltd.
Asset Management Companies in Pakistan
Mutual Funds in Pakistan
8
Year-wise Growth of Mutual Funds Since 2001
9
Total Mutual Funds Industry as % of GDP for the year 2005-2006
Source: State Bank of Pakistan
10
Mutual Funds Industry to Bank Deposits (September’ 2006)
Source: State Bank of Pakistan
First modern day mutual fund was opened in North America in 1924
The GREAT DEPRESSION of 1930s in USA has stalled the growth of mutual funds sector, like many other economic activities
Yet it was, 1990s that mutual funds became mainstream investments in the USA and around the globe
At the end of June 2006, total mutual fund assets all over the world were $ 19.413 trillion
History and Inception of Mutual Funds
Worldwide Mutual Fund Industry
Worldwide Mutual Fund Industry
Asia/Pacific Mutual Fund Industry
Islamic Mutual Fund Industry
One of the fastest growing sectors BUT
As compare to over all mutual fund industry, it is at infancy
stage of growth and development
The wider acceptance of equity funds by Shariah Scholars in early 1990s paved the way to launch Islamic mutual funds.
Currently, approximately 250 Islamic Institutions in some 75 countries, managing funds worth over USD $200 billion.
Comparison of Islamic vs World Wide
Mutual Fund Industry
Comparison of Pakistan’s vs. World Wide
Islamic Mutual Funds
17
Total Mutual Fund Industry in Pakistan - Rs. 171.00 bn
Size of Islamic Mutual Funds in Pakistan-Rs. 9.12 bn (5.33%)
18
Size of Islamic Mutual Fund in Pakistan - Rs. 9.114 bn
Market Share of Al Meezan Investments - Rs. 6.925 bn
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Total Mutual Fund Industry in Pakistan - Rs. 171 bn
Market Share of Al Meezan Investments - Rs. 6.925 bn
as of September 30, 2006
Controlled by Public Sector, initially
Lack of awareness
Interest rates were too high
Education
Distribution
Low savings
Why Mutual Funds lagging in Pakistan?
What is Mutual Fund?
What are different types of Mutual Funds?
Why an individual invest in Mutual Fund?
How can Mutual Funds be purchased?
How many people know?
Experienced and Professional Fund Management
Diversified portfolio
Economies of Scale
Liquidity
Convenient processing
Affordability
Transparency
Stringent regulator
What are the Advantages of investing in Mutual Funds?
Cont…
What should be done to become a significant contributor in the
global market?
Putting collective efforts at industry level Comprehensive analysis of investors’ needs
and preferences Education of People about mutual funds at mass level Product innovations by launching specialized
products. Widening, broadening and deepening the markets Tapping overseas investor base
(Opportunities)
Cont…
What should be done to become a significant contributor in the
global market?
Marketing in semi-urban and rural areas Improving quality of service Quick dissemination of information Banking and other related industries to
utilize their network for mutual fund distribution
Expanding distribution network by discovering non- non-traditional channel of distribution
(Opportunities)
Understanding the importance of retail market
Separate funds for various investors’ segments.
Promoting standardize performance measurement procedures at industry level
Creating positive image about the fund and changing the nature of the market
Better technology aiming at providing quality service
What should be done to become a significant contributor in the
global market? (Opportunities)
Advertisement through Print Media Newspapers Magazines
Advertisement through Electronic Media Television Radio
Outdoor Advertising Hoardings Banners
Cont…
How can Mutual Funds be marketed?
Direct Marketing Personal Selling Telemarketing Direct Mail to existing as well as potential investors
Below the line activities (BTL) Participation in exhibition Information desk as public places Arranging seminars - Corporate as well as Educational
Selling through Intermediaries/Distributors
Cont…
How can Mutual Funds be marketed?
Comprehensive website and link with other popular websites Providing quick response to the Customers
through Distribution Centers Call Centers Emails
Providing up to the mark value addition services
How can Mutual Funds be marketed?
What about the target market?
Individuals Institution
Government Institutions Private Organizations Provident / Pension Funds
Trusts / Funds / Welfare Organizations
Educational Institutions Overseas investors Semi-urban and rural Segment
What would be the appropriate marketing strategy for each
segment?
Individuals
Indirect selling through distributor network and regular
campaigns through print and electronic media, exhibition
Institutions
Personalized and direct marketing
Trusts / Funds / Welfare Organizations
Direct selling as well as indirect selling through distributor
network and creating awareness through appropriate media
Cont…
What would be the appropriate marketing strategy for each
segment? Overseas investors
Personalized and direct marketing, prompt and timely service, website links, advertisement in foreign print media, seminars / conferences, road shows
Educational Institutes Personalized and direct marketing
Semi-urban and rural Segment Electronic media, simplified literature in rural languages, visits by mobile vans with audio-visual aids, hoardings, wall paintings and educational films
Challenges for Mutual Fund Industry
Lack of diversified products range
Understanding of investors’ need
Public awareness at mass level
Un-stability of Stock Market
Dearth of liquid debt instruments
Protecting and maintaining the integrity and quality
Ensuring performance
Maintaining momentum to ensure viability
Providing competitive returns
Cont…
Challenges for Mutual Fund Industry
Mitigating the Risk involved Inadequate Intellectual Capital Comforting & convincing with bad past
investment experiences
Budgetary constraints for Marketing activities.
Low saving and Investment oriented society Information disclosure and transparency Choosing appropriate distribution network Right timing to launch funds In time after sale activities Strict monitoring of regulators
Recommendations
Team work for the growth of mutual fund industryMass awareness and education about mutual fundsStrengthening distribution network Understanding the fact that related financial industries are
not a threat Promoting healthy business practices and ethical code of conductDisseminating timely information Establishing affiliations with mutual funds associations in other countries and promote one-to-one contactsMedia should play a more supportive and constructive role for awareness and disseminating information
The winning formula is the troika of performance, service
and trust for meeting long-term goals and
becoming a true success story in the
world’s financial markets.
Thank you