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Fund Branding Entering New Era, Execs Say

Over the past several years, brand development in the mutual fund industry has taken a back seat to product proliferation. Driven by the bull market, fund companies developed products at an unprecedented pace in an effort to offer a diverse product line that appealed to all types of investors.

But that is slowly changing, according to marketing executives who say an overcrowded fund market and sagging performance are forcing many firms to consider the benefits of a strong brand name.

Clearly, the fund industry is saturated with every type of mutual fund conceivable. Over the past five years the number of new funds that have been launched has increased dramatically. At the end of 1997, there were 6,684 open-end mutual funds, according to the Investment Company Institute. That number has steadily risen to 8,344 as of the end of July, according to the ICI.

"You had a boom in the market that spawned thousands of funds," said David Srere, a group director at Siegelgale, a New York-based strategic branding firm. By and large, the fund industry has shrugged off branding in favor of product development and sales. "It's not a branding culture. It's a sales mentality and it's making that next purchase and it's a more market driven approach. The concept of branding is new to the business," he said.