From THE HINDU group of publications
Wednesday, November 07, 2001


Franklin, Alliance, Pioneer top in MF service survey

Nilanjan Dey


FRANKLIN Templeton, Alliance Capital and Pioneer ITI are the best three mutual funds on the basis of service standards. These rankings are the result of a special service standards survey conducted by Cholamandalam Distribution Services.

Cholamandalam's assessment of the asset management companies (AMCs) is in the context of factors that have an immediate bearing on marketing efforts of distributors and investment advisors.

Fifteen service parameters have been considered, categorised into three groups : marketing support, operational efficiency and general opinion. AMCs have been ranked on a 0-5 scale with regard to each parameter.

On the whole, a number of private sector players managed to beat the rest of the industry. Among them, Franklin Templeton (with a service score of 59) occupied the No 1 slot on the basis of the service it provides to distributors.

Alliance and Pioneer ITI have scored 56 and 53 respectively, followed by HDFC MF (51). Three AMCs -- Sundaram Newton, Zurich India and Prudential ICICI -- shared the same rank with a score of 49.

As for marketing support, the important considerations are disclosure standards, regularity in issuing factsheets, frequency of interaction with AMC officials, sales support etc. As for operations, the key issues are query handling efficiency, response time, non-repetition of errors and simplicity of application processes. Lastly, general opinion is made up of a combination of such factors as range of products, performance, direct selling and feedback from customers.

All the 15 parameters have been assigned equal weights. Relative weights for a category, however, have been assigned automatically in view of the number of parameters in it. Marketing support, with six parameters, was accorded the highest weight and the greatest importance.

According to Cholamandalam, parameters such as timely declaration of NAV and dividend policy of AMCs have not been taken into account as these are no longer relevant.

Service standards of an AMC, Cholamandalam has observed, play a key role in distinguishing between distributors of financial products and independent financial advisors. Also, from the point of view of the AMC, a higher level of service standards will translate into a greater comfort level. This is important in the context of positioning the right product for the right investor.

An AMC that did not record more than five responses was not considered for ranking purposes. Similarly, a response that did not rate more than five AMCs was ignored.

The AMCs not considered for the survey are Dundee, Escorts, PNB, Jardine Fleming, Morgan Stanley, Indian Bank, Bank of Baroda, Canbank and Bank of India. These AMCs are either absent where the respondent is located or there is not enough experience in dealing with its inability to respond objectively.

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