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Marketing of Mutual Funds in Pakistan:

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Title: Marketing of Mutual Funds in Pakistan:


1
Marketing of Mutual Funds in Pakistan Opportunit
ies Challenges By Sohail Yaqoob
2
(No Transcript)
3
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

4
Mutual Funds Industry in 2006
  • 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
5
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.

6
Asset Management Companies in Pakistan
7
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
11
Worldwide Mutual Fund Industry
History and Inception of Mutual Funds
  • 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

12
Worldwide Mutual Fund Industry
13
Asia/Pacific Mutual Fund Industry
14
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.

15
Comparison of Islamic vs World Wide Mutual Fund
Industry
16
Comparison of Pakistans 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
19
Total Mutual Fund Industry in Pakistan -
Rs. 171 bn Market Share of Al Meezan
Investments - Rs. 6.925 bn
as of September 30, 2006
20
Why Mutual Funds lagging in Pakistan?
  • Controlled by Public Sector, initially
  • Lack of awareness
  • Interest rates were too high
  • Education
  • Distribution
  • Low savings

21
How many people know?
  • What is Mutual Fund?
  • What are different types of Mutual Funds?
  • Why an individual invest in Mutual Fund?
  • How can Mutual Funds be purchased?

22
What are the Advantages of investing in
Mutual Funds?
  • Experienced and Professional Fund Management
  • Diversified portfolio
  • Economies of Scale
  • Liquidity
  • Convenient processing
  • Affordability
  • Transparency
  • Stringent regulator

23
What should be done to become a significant
contributor in the global market?
(Opportunities)
  • 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

Cont
24
What should be done to become a significant
contributor in the global market?
(Opportunities)
  • 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

Cont
25
What should be done to become a significant
contributor in the global market?
(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

26
How can Mutual Funds be marketed?
  • Advertisement through Print Media
  • Newspapers
  • Magazines
  • Advertisement through Electronic Media
  • Television
  • Radio
  • Outdoor Advertising
  • Hoardings
  • Banners

Cont
27
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
28
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

29
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

30
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
31
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

32
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
33
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

34
Recommendations
  • Team work for the growth of mutual fund industry
  • Mass awareness and education about mutual funds
  • Strengthening distribution network
  • Understanding the fact that related financial
    industries are
  • not a threat
  • Promoting healthy business practices and ethical
    code of conduct
  • Disseminating timely information
  • Establishing affiliations with mutual funds
    associations in other countries and promote
    one-to-one contacts
  • Media should play a more supportive and
    constructive role for awareness and disseminating
    information

35
The winning formula is the troika of performance,
service and trust for meeting long-term goals and
becoming a true success story in the worlds
financial markets.
36
Thank you
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