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Small Funds Use Personal Contact, PR to Boost Sales

Assets under management are down for nearly all firms due to market depreciation. And making matters worse, most funds have also been hit with steep outflows. According to Strategic Insight, only about 22% of equity mutual funds had inflows for at least four of the last five months of 2008. But a few firms have actually seen positive flows over the past year.

We spoke with executives from four of these funds whose outstanding shares are at or near record highs. In our article, these firms, who also work with SunStar for marketing and public relations consulting services, provide you their best practices and ideas to grow market share despite current treacherous market conditions.

The four mutual funds are the Jensen Portfolio run by Jensen Investment Management; the Auer Growth Fund run by SB Auer Funds; the Croft Value Fund run by Croft Funds, and the James Balanced: Golden Rainbow Fund managed by James Investment Research. All four have seen continued investor interest, adding new money to their funds despite the market's pullback.

How are they doing it? Each fund manager agrees that the linchpins in their strategy are smart marketing, consistent public relations strategies and close contact with their advisers and retail investors.

Investments Come First, Then Marketing

Dave Mertens, principal for sales and marketing at Jensen, has watched other funds cut staff, media exposure and client services. But as exposure and client services go, so go the clients.

"Don't kid yourself," he says. "Performance is important, but it comes from an investment discipline and sticking to it. We are an investment firm first; marketing is second. You have to get better to get bigger, not the other way around."

Mertens' marketing approach for the Jensen Portfolio is eloquent in its simplicity. "We believe in transparency, so people know what to expect." The managers haven't done anything differently in talking with the public during these trying times. Rather, they've stayed consistent in message and visibility.

Keeping the fund's name in the media drives more financial professionals and prospective investors to its site. So, Jensen is investing marketing dollars in a re-launch of a more fluent, easier-to-navigate website. "We feel our website will set us apart," Mertens said. "We'll be adding periodic whitepapers and reporting significant changes in our holdings." Mertens is committed to developing the website to target the specific needs of his investors and tailor it to meet those needs.

"If anything, we're going to ramp up our public relations and marketing in 2009," Mertens added. "We're going to be out there even more to alleviate market concerns and fears." That strategy includes quarterly phone calls to investors, more media exposure, periodic whitepapers and conversations with the press. Jensen provided media training for its entire staff and has plans to revisit the program every few years to ensure everyone stays on message. "We conduct a media tour in New York once a quarter. Talking to the press is a lot like selling. Your presence needs to be continual and visible."

Making Sparks Fly

Robert Auer likens his fund's marketing initiatives to spark plugs in the engine: your car won't start without them. But even with the best spark plug, all the other parts must be in good shape or the car still won't run. For Auer, public relations was the spark that set off a chain of events that allowed the Auer Growth Fund to add significant new shareholders and new money from existing investors in the fund's short history.

"At first, I thought trade shows were a waste of money. But then I attended a Morningstar conference and met with reporters for a set of interviews at the on-site press room. One of those interviews was posted online and was 'accidentally' seen by a potential investor who is now our largest shareholder." Auer advises firms to be "out there." He suggests that firms not only attend shows, but also purchase the attendee lists and strategically mail something about their fund before and after to pique financial advisers' interest. He's found advisers mention they are stopping by the booth because of the mailings.

Distribution on the major platforms like Schwab, Fidelity and the rest are essential parts of making all the parts fit together. Auer's also supplementing those efforts with trade shows, a newly revamped website and frequent conversations with the press and investors. "But to be effective," he cautions, "website need continual new content."

He added: "Cultivating deep relationships with professional journalists is key in attracting the interest of financial publications. We do a quarterly media day. Then we take our best interviews with reporters from CNN, CNBC, Bloomberg, The Wall Street Journal and others and post them to our website."