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Marketing Gimmicks Seen on Upswing

Constricted by tight marketing and advertising budgets, small fund companies are using a variety of unconventional marketing strategies to sell their funds and increase brand awareness, according to mutual fund marketing executives.

Guinness Flight Investments of Pasedena, Calif. announced one such strategy earlier this month involving a partnership with of Ann Arbor, Mich. is a fund-tracking website that rates funds that are either too small or too new to have ticker symbols. Guinness will sponsor a biweekly online scavenger hunt on the website. The company will award winners of the contest $2,500 to make the minimum investment in its Wireless World Fund, according to Jim Atkinson, managing director of Guinness.

The contest is beneficial for both parties, according to Jonas Max Ferris, president and co-founder of In exchange for its sponsorship, Guinness will be given a banner advertisement on the site. The contest should attract repeat visitors to's website, he said.

The contest is the first of its kind, according to Darby Hobbs, president of Graylyn Associates, a marketing consulting agency for the financial services industry.

"Fund companies haven't done this before," she said. "It is the next evolution of Internet use. Fund companies haven't been open to being this creative and that's changing because they realize the Internet is a new channel and they need a way to introduce themselves out there."

The contest is an innovative and relatively inexpensive method for Guinness to advertise its Wireless World Fund to its niche market, said Jim Atkinson, president and CEO of Guiness. The company has a marketing and advertising budget of approximately $1 million annually and it currently has $500 million in assets under management. The marketing and advertising budget covers some advertisements in magazines and newspapers. The contest will be paid for entirely out of that budget and not from 12b-1 fees, Atkinson said.

"Our whole fund range is about change in the future," Atkinson said. "There is a certain segment of the population that wants to take part in that change in a new economy. In many ways, that investor is self-directed and self-motivated and we're after that sort of investor and I think that MaxFunds attracts that same type of person."

In the month since began, it has registered approximately 1500 users, most of whom are 28 to 40 years old, according to Ferris.

"The whole idea is that you can do stuff online that you can't do in a magazine and that's what you've got to do with the Internet," he said. "A small fund can really go after a tight demographic and we are doing something to co-brand our products and we're doing it on a lower budget."

Another unusual online marketing scheme under development will provide mutual fund shares to purchasers of products from a variety of companies listed on the website, The site will allow parents of newborn children to create personalized websites with pictures of their babies and information about them. Visitors to the site can purchase products from the businesses listed on the site and a percentage of the purchase price will go towards the purchase of mutual fund shares, said Mike Diamond, president of of Overland Park, Kan., the company that is launching the new site. Several mutual fund companies have expressed an interest in providing the funds and a deal with one of them, which Diamond declined to name, is being negotiated, he said. Diamond says the site will probably be launched within the next few months.

The arrangement is unique because it groups a fund company with businesses outside the financial services industry, according to Dennis Dolego, director of research for the Optima Group of Wilton, Conn., a mutual fund distribution consulting and research company. But fund companies need to be careful about these new arrangements, he said.

"The best way to get new customers is through solid performance," he said. "You have to be selective with who you associate with so you don't compromise your own reputation. Any fund selling well probably is selling on the ability to manage the money. I think people will ultimately base their decisions on performance."

Another marketing plan being developed by Baron Funds of New York will offer shareholders discounts for products of the companies in which the fund invests. The program is called "Cool Deals" and encourages investors to patronize the companies that are held in Baron's funds. Vail Resorts of Avon, Colo., Budget Rental Cars of Lisle, Ill., Sotheby's of New York and Sun Atlantis Resorts of Paradise Island, The Bahamas have all agreed to offer Baron Fund's investors discounts when they use their services, according to Ron Baron, CEO and president of Baron Funds. The program is a means of making investors aware that they are partial owners in the companies their funds have invested in and is not intended to lure new investors, he said. Baron Funds has four funds and $9.4 billion in assets under management.

However, by establishing a relationship between a fund company and the companies it holds shares in, the program could influence a portfolio managers' investment approach, Dolego said.