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Shyamal Banerjee/Mint
Shyamal Banerjee/Mint

A for apple, B for bat, M for mutual fund

To launch not just one or two but five schemes doesn't look like great sales material, especially if it is hanging by the tails of a political storyit looks like a tsunami

Two new fund offers (NFOs) launched recently caught my attention. One was by Tata Asset Management Co. Ltd and the other was by Axis Asset Management Co. Ltd. Tata AMC has announced the launch of five new sector and thematic funds, plus the relaunch of an existing one, under an umbrella concept called ‘Own A Piece of India’ (OPI). Axis AMC has launched Axis Children’s Gift Fund (ACGF). I couldn’t help but notice the difference in their languages.

Tata AMC is enamored by Prime Minister Narendra Modi’s vision. A senior executive I spoke to, who did not want to be named, said that India’s perception in the eyes of the world, especially those countries that matter when it comes to investing their capital outside, has improved drastically. He continued: an ideal way to participate in India’s growth story is to align with the sectors, which the fund house thinks, will come out as winners. So OPI has one form, requires one cheque and investors or their advisers are supposed to allocate investor’s money into the six themes (equally or in different proportions). Whether Modi delivers or not is something we’ll know in the future.

To launch not just one or two but five new schemes doesn’t look like great sales material, especially if it is hanging by the tails of a political story. It looks like a tsunami. While some fund houses are going the bulk NFO way, others have learnt lessons from the past and seem to be getting the messaging right.

Axis AMC has launched a balanced fund that aims to encourage parents to invest on behalf of their kids. But it’s not about the fund’s structure that caught my attention. It’s the way the fund house is going about creating awareness.

The challenge: how to sell a kid’s MF scheme? The MF commissioned research firm Neilsen, an in-sights provider, to do a survey to check parents’ awareness in planning for their kids financially, preparedness levels and apprehensions. The survey yielded interesting results. Children’s education is a parent’s biggest apprehension. While more than 75% parents mentioned that they are likely to support their kids pursing what they want to do, they still prefer that their children pursue ‘conventional’ career choices. More than 3/4th parents said they knew education costs will rise significantly but had no idea by how much. About 93% parents claimed to have planned for their kids’ future by way of saving; preferred way was fixed deposits, recurring deposits, followed by loans.

One of the research’s biggest findings was that grandparents also wanted to leave a legacy behind but were unable to write a cheque because MF rules do not allow third-party cheques. This prompted Axis AMC to eventually talk to the Securities and Exchange Board of India (Sebi) and get an exemption for third-party cheques.

Subsequently, the AMC conducted exercises across Crossword stores and Kidzania centres to spread awareness. They encouraged walk-in parents and kids to indulge in various activities. Among them was an exercise in which kids had to paint what they wanted to become in their grown-up years; and parents had to paint what they thought their kids would become. They could not see the other’s painting. There is even a video on this, and which is part of their awareness campaign. Most of the times, what the kid drew was different from what the parent had made. Axis AMC has drawn from this experiment to drive home the point that as career options increase, so is the need to plan financially.

You may or may not invest in ACGF. It’s a new scheme, no track record and a lock-in till your child turns 18 (there is a no lock-in plan as well). Some planners claim the lock-in plan has also been devised to try and pay a higher commission to Axis Bank, which has thrown its full might behind the product (even the bank’s chief executive officer, Shikha Sharma, is said to have nudged her entire staff to sell the product). But the MF’s language is a fresh change from the large-cap, mid-cap, small-cap fund talk most fund houses use. The fund house is even arranging child psychologists to talk to the public through distributors and advisers; to engage with parents to make them understand the need to plan and plan the right way.

The only reason why countless insurance policies are sold is because their advertisement campaigns focus on your goals and aspirations. They don’t say this fund is a large-cap fund or that fund is an arbitrage fund.

The pitfall is that this could be a double-edged sword. Some financial planners claim that insurance policies may have communicated the message rightly but most of their products have been missold; the returns have not been commensurate to the expectations. Therefore, that’s not really a feather in an insurance company’s hat. So then, what if you invest in ACGF without understanding the implications? The sense I get is that financial planners might avoid this, but distributors might lap it up because Axis AMC’s message is easily conveyable and makes an impact.

This space is evolving. Like a Bengaluru-based financial planner who was at the helm of one of Axis AMC’s stall at a mall a few weekends ago said, parents with kids who walked in thought it was a crèche. Some of them requested this lady to take care of their kids while they went shopping. A dipstick survey of 22 journalists present in my own bureau today tells me that only about 55% invest in MFs, even though all have heard about it. Even if it was a minuscule sample size, it just shows that financial literacy has still a lot of work to do.

Axis AMC will need to continue its efforts; this is not just an NFO thing. Communication needs to be eased across the board and not just in the NFO period. HDFC Asset Management Co. Ltd’s recent advertisement campaign hits the bulls eye where it conveys the benefits of doing a systematic investment plan, and in a way that melts you. Experts say more fund houses need to focus their communication and make it more digestible, on a continuous basis. It can take various forms, but the fund house has to talk to me—the investor.

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