March 10, 2009

Best Strategies for Sales (Retention) Now! Part 2.

by Dan Sondhelm

For most mutual funds, inflows have been tough to come by. According to Strategic Insight, only about 22% of equity mutual funds had inflows for at least four of the last five months of 2008.

So today, we continue our special report on best practices and ideas to grow mutual fund market share during these challenging times.

We turned to executives from four of these growing funds whose outstanding shares are at or near record highs. These firms also work with SunStar for marketing and public relations services.

In our last issue, we spoke with fund companies SBAuer Funds and Jensen Investment Management. Today, we feature James Investment Research and Croft Funds.

They keep on talking and talking and talking...
"Don't hide." That's the watchword from Jeff Battles, Director of Marketing at James Investment Research. "Clients aren't pointing fingers and saying 'you were right or wrong;' they're grateful for whatever you can do to explain and reassure."
"Right now, people are very anxious. Much as we'd like to, we can't call each of our shareholders and hold their hands as the market continues to gyrate, so we talk to the larger audience as frequently as we can."
In fact, they've talked to them daily for over ten years!
Three portfolio managers at James take turns doing a 12-minute spot on a daily radio show in Dayton, Ohio, answering a handful of questions posed by the show's host. The managers comment on the day's expected economic and business news.
"The segments are deemed 'extemporaneous conversation,' so compliance has not been an issue," says Battles. "The name recognition is invaluable." Dayton's prime FM news station airs a two-minute clip of the interview same day at the end of drive-time that includes an introduction and call to action. The interviews continue to work for James for five days, where they are accessible on the advisor's Web site.
James is a big believer in PR. Since 2003, they've averaged 125 positive news items per year, ranging from quick quotes to feature articles in Forbes and Smart Money to live appearances on CNBC and Bloomberg. In 2008, they hit 140.
Research and share.
Beyond traditional PR, the firm authors special studies (white papers) at market inflection points. This, too, is a long-time practice dating back to 1972. Dr. James, the firm's 77-year old founder, wrote twice as many as usual in 2008.
Each weekend, the firm pulls data on 100 macro-economic factors, peppered with additional research. A member of the James family reviews the information and prepares a one-page paper that becomes the marching orders for the investment group on Monday morning. Later in the day, a synopsis of these insights is emailed to several thousand investors. "It's all about communication," adds Battles.
In 2008, for the first time, they professionally videotaped their speakers at a 36-year running annual forecast reception for advisory clients. The video was then posted to their Web site and 5000 DVD's were mailed out, complementing a four page glossy summary handed out at the reception. For 2009, Battles says they'll be doing more of the same - sharing information and staying in front of the public.
So, what works best?
In Battles' opinion, there are four factors that are an essential starting point:
1) Good performance,
2) Research-oriented team,
3) Portfolio managers willing to talk and explain and
4) Ears and eyes dedicated to marketing.
That said, "apply discipline, it's too easy to let these programs slip," he cautions. "When that media tour day arrives, it may be too cold or too hot, the managers may be too busy....but it is so important to stay out there. You've got to publish according to the promised schedule, whether you want to or not."
When asked what Croft Value Fund was doing differently when talking with investors recently, Russell Croft, Portfolio Manager offered, "Communicating more frequently." Croft is focusing on providing shareholders more educational information to help calm their fears. They aren't writing lengthy newsletters, rather, short to the point communications. Many are just announcements and bullet points to let people know their thoughts on what's going on in the market.
"We're presenting much of this information through frequent e-mail campaigns." They keep a quarterly schedule, but when market events dictate, they are quick to communicate. E-mails are one of the most cost effective ways to keep your firm's name and message in the forefront of investors' minds, at the same time responding with a timely and focused message to new market developments.
Croft is also committed to public relations.
These initiatives ensure that his fund stays in front of the financial media, offering insight and value to investors. They do a monthly media tour, meeting with journalists from four or five publications each time. "We're staying with the same programs we had, taking reporters' calls when we can and maintaining good relationships."

"If you are small like us, the best lessons are learned by listening to the experts. Take advantage of their experience. Then, create a plan and stick to it. We've found it absolutely does work to stay in front of the media," Croft says. "Our profile story in Barron's definitely contributed to our inflows. Our best advice is to keep talking to everybody; you never know when the editor will want to profile your fund."
This, Too, Shall Pass.
When the volatility of today's market crisis passes - and it will pass - funds that have stayed the course, just like investors, will come out ahead.
Call us at 703-894-1046 to discuss how SunStar can help you achieve recognition in this competitive environment.

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