Using PR to Differentiate in a Commoditized Investment Market

According to senior reporter Kevin Black, in “Fads Dominate as Creativity Falls,” an article last month on FT.com, “The US mutual fund industry’s best attempts at innovation have fallen flat in recent years due to a hairy mix of factors ranging from changes in how funds are distributed to the simple fact that many new products have failed to deliver their promised returns.”

Black goes on to say that innovation is discouraged. “It’s expensive to roll out new products and it takes three to five years to incubate a fund and develop a track record. Being a first mover also carries a lot of risk, something most firms are unwilling to roll the dice on.” He adds that one way to differentiate in this mature and crowded market is to offer access to a particular niche, but warns that there’s still a downside: “limited appeal.”

Public relations would seem to be an essential tool that is being too often overlooked by the hyper-competitive mutual fund industry, with over $12 trillion invested in over 8000 separate funds, according to the Investment Company Institute (ICI). As wealth managers move downmarket and as the client mix for many funds grows more and more institutional, PR strategies have to change accordingly. A lot of what were once strictly institutional products are now being reconstituted into tremendously complex products for individuals, such as hedged mutual funds. In this kind of environment, two basic PR skills are key: financial experience and the ability to clarify complexity.