Product Design and Range for Mutual Fund

Mutual fund products (schemes) are basically investments-oriented and the savings mobilized by them are invariably invested in the instruments (shares, debentures) projected in the schemes. There is little scope for flexibility. Therefore, due care needs to be taken while designing particular products taking into account expected changes in capital/ stock market in view of future investments return. The changing profile of customers (investors) must be taken into account in identifying the savings market.

Different segments of the potential savings market have different expectations—long-term growth, regular income tax benefits, and so on. New products must be aimed at satisfying one or more objectives. Tax laws and other related regulations also play an important role in designing new products because benefits can be offered to investors within the existing framework of tax regulations.

India lags behind countries like the USA, the UK and Japan in terms of innovative products. Most of the products launched in India are either income or income-cum-growth schemes; few are pure growth schemes. Investor options have been restricted due to limited product range.

Like product planning, product launching is a crucial element in marketing. Many Indian mutual funds have performed poorly due to wrong timing of launch. Market research can help to assess the needs of potential customers, availability of existing products and future growth in demand.