Marketing of Mutual Funds in Pakistan:

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

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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
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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.

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Asset Management Companies in Pakistan
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Mutual Funds in Pakistan
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Year-wise Growth of Mutual Funds Since 2001
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Total Mutual Funds Industry as of GDP
for the year 2005-2006
Source State Bank of Pakistan
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Mutual Funds Industry to Bank Deposits
(September 2006)
Source State Bank of Pakistan
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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

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Worldwide Mutual Fund Industry
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Asia/Pacific Mutual Fund Industry
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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.

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Comparison of Islamic vs World Wide Mutual Fund
Industry
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Comparison of Pakistans vs. World Wide
Islamic Mutual Funds
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Total Mutual Fund Industry in Pakistan - Rs.
171.00 bn Size of Islamic Mutual Funds in
Pakistan-Rs. 9.12 bn (5.33)
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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
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Why Mutual Funds lagging in Pakistan?

• Controlled by Public Sector, initially
• Lack of awareness
• Interest rates were too high
• Education
• Distribution
• Low savings

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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?

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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

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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
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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
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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

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How can Mutual Funds be marketed?

• Advertisement through Print Media
• Newspapers
• Magazines
• Advertisement through Electronic Media
• Television
• Radio
• Outdoor Advertising
• Hoardings
• Banners

Cont
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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
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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

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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

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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
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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

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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
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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

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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

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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.
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Thank you