News on mutuals

Ad agencies with mutual funds accounts are readying campaigns that will be the first under the new rules governing the advertising of this financial product.However, it is unlikely consumers will see a radical shift from what they have already been exposed...

Ad agencies with mutual funds accounts are readying campaigns that will be the first under the new rules governing the advertising of this financial product.

However, it is unlikely consumers will see a radical shift from what they have already been exposed to with mutual funds advertising now that the Canadian Securities Administrators’ Policy 39 allows greater latitude in advertising in print, radio and television.

The main point of the Aug. changes is informational. Before Aug. 1, mutual funds distributors could not compare their product return to any other investment benchmark but could compare it to the rate of inflation.

Now Policy 39 allows comparisons in advertising between funds and such investment vehicles as guaranteed investment certificates, gold, Treasury Bills and the like.

Larry Wolf, president of Wolf Advertising in Toronto, has a new print campaign breaking for The AGF Companies’ High Income Fund.

The campaign is using ads in daily newspapers and the national financial press across the country, a special four-page insert for use in the dailies next weekend, and direct mail.

Wolf says the new rules, which went into effect Aug. 1, will not mean big strategic or creative shifts for mutual funds advertising.

Lisa Worth, account executive at The Robert Kyle Agency in Toronto for Altamira Investment Services, welcomes the new rules as a great opportunity for her client.

Worth says because Altamira has had three top performing funds for the last few years, Policy 39 will let the agency create greater public awareness of the mutual fund’s performance.

Worth predicts comparisons among different mutual funds distributors will be a major thrust in print in future, with increased ad linage to cope with the disclaimers required.

The rules for mutual funds advertising state no performance information is allowed in commercials broadcast on radio or television.

For print ads, comparative performance information can only be included for funds administered by the same management; for an index or average; or, for those funds with similar investment objectives.

A mutual fund, simply put, is a collective investment vehicle giving individual investors greater initial interest on their money when it is pooled and invested with the money of other investors than they would receive if they invested individually.

Bill Terry, vice-president, account group director at Robert Kyle, says the agency is working on a new corporate and rsp campaign for Altamira, although nothing is settled yet.

Terry says the new campaign, likely using print, has not been hindered by the new rules, adding they set clearer boundaries about what is permissible and what is not.

He says advertising for mutual funds will be more widespread, but not radically different from what consumers see now.

Richard Stone, vice-president, product manager at the Guardian Group of Funds, welcomes Policy 39, calling it a winner for investors.

Worth watching, he says, is the probability of mutual funds distributors with a good product based on service and performance becoming more competitive.

Stone says the new rules now allow distributors to highlight their results relative to their competition in a consistent manner and which is advantageous to investors.

Patrick Ballantyne, director of policy development, Investment Fund Institute of Canada, says Policy 39 makes sure investors have as much information about a mutual fund as possible, but there is not much in it that lends itself to moving mutual funds advertising to tv. DC