The fund mobilisation trend in the mutual funds segment suggests that brand plays an important role in helping fund houses attract investors initially, although in the long term, it boils down to the performance of the schemes, said experts
"Brands are useful mainly for raising money from investors, while investment performance is adjudged by market conditions and fund manager's instinct. However, bigger brands are able to generate larger funds through their offers," MF tracking firm Value Research CEO Dhirendra Kumar said.
The MF industry holds immense potential for the existing as well as new players entering or those envisaging an entry into the segment, but firms with a strong brand presence definitely have a competitive advantage.
"A brand image is very important for mutual funds and investors base their decisions on known and dependable brands. Brand-building exercises are mostly taken up by foreign players and big industrial houses, which have deep pockets, while fund houses with lower corpus can only attract investors by showing good performance," Taurus Mutual Fund Managing Director R K Gupta said.
According to market opinion, people feel that funds sponsored by foreign entities and large industrial houses engage in large amount of brand-building exercise before launch or while introducing a new scheme as they have large capital pools backing them.
Prime examples of such funds could be of Mirae Asset Global Management Fund, Franklin Templeton and those promoted by domestic majors such as Reliance, Tata and Birla.
Mutual funds sponsored by banks gain from the image of security projected by the lender as investors feel more secure about their investment.
