The Hindu Business Line : Reaching out to investors

Before you dub this as a little-known line from the Gita, let us assure you that this can be safely attributed to Mark Twain. More to the point, it is being used by Standard Chartered MF to peddle its latest equity scheme - adding to the growing domain of innovative communication stratagems that fund houses are increasingly working out.

The old world of investment-centric communication, marked by staid mailers, hoardings and the like, seems to be changing at breakneck speed, giving way to fresher, sharper concepts that some players - not all - have so convincingly exploited in recent times.

Witness Standard Chartered MF's newest ploy, involving stylishly-produced application forms that have come wrapped in pretty imagery, never mind the printing costs. What it sells is an equity fund, one that seeks to limit its size to Rs 300 crore. Not really a fund for the mass market, one might be tempted to think after reading the material that the MF has prepared. Right, and that probably necessitates the rather special way of reaching out to investors.

The point is, the responsibility of providing timely, effective communications lies with the fund house concerned. Marketing executives of MFs are happy to discuss their new products just before these are launched. The same executives are often loath to talk about them at later stages.

The result: Sustained communication takes a backseat; people have to strive a lot harder to find out what is actually happening; there is confusion in the market.

Among those who have seriously tried to communicate effectively in recent days is newcomer Fidelity MF. The latter, which so far has a single product in its stable, has used a few simple, time-tested means to convey its point of view. Going by the sheer size of the scheme, it seems that large sections of the market have liked its ideas.

In the context of MFs, what can differentiate good communication strategies from the not-so-good ones? The former, for all you know, are likely to be reflected in sustained inflows, especially so if the performance figures are respectable enough.

Provided the returns are good, an investor's interest in a theme or a product may well be sustained over time if the fund house involved backs it up with strong communication. Surely there are funds that the market has forgotten all about! Surely there have been failed, unproductive strategies that investors have rejected! Go deeper into these issues, and you will know why things became what they did.

All said and done, the smart investor will try to read between the lines when product-related literature land up in his mail box. He will just not go by what lies on the surface. He will sift and delve - not yield and follow. He will try to be different from his more pedestrian counterpart who simply writes cheques and sees the NAV charts every other day.

As Mark Twain urges - not again!, but he is eminently quotable - "throw off the bowlines, sail away from the safe harbour, catch the trade winds in your sails".

Feedback may be sent to nilanjan@thehindu.co.in

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