Strong Branding Makes You Buy Funds

Fund providers with solid brands, such as BlackRock, wield power over your investment decisions

Alanna Petroff 14 February, 2012 | 9:14AM

New research shows successful branding by fund providers can significantly affect your investment decisions, causing investment money to be funnelled towards fund providers with a solid brand and reputation.

The best brand in Europe right now amongst asset management houses is BlackRock, according to a new report from Berlin-based research company Fund Buyer Focus. BlackRock’s solid brand means financial planners are more likely to recommend BlackRock funds to clients over other investment opportunities.

“In an environment of extreme uncertainty, brand has become the most important driver of choice for fund buyers,” said Diana Mackay, director of Fund Buyer Focus and co-author of the report.

It’s common knowledge that effective branding can encourage people to buy one product over another, such as an Apple computer over a PC. But most people would not expect branding to be such a potent force in the asset management industry. This report acts as a reminder to investors that even though branding can be powerful, brand is not everything. Fund performance, fund fees and management processes and experience should still be taken into consideration when choosing to invest in a specific fund.

BlackRock, which has EUR 280 billion in assets under management, seems to have benefited from its ability to offer both active and low-cost passively managed options, according to the report. Carmignac Gestion, a smaller French fund house that has plans to soon move into the U.K. fund market, ranks second behind BlackRock for brand value in Europe. According to the report, this dominant brand presence comes despite questions being raised over its flagship fund performance in 2011. The report shows Carmignac has successfully deepened its client relationships to the point where its brand attracts investor support, not just its fund performance.

In the U.K., the most popular three fund brands are M&G Investments, Invesco and Schroders. (In fact, M&G has been awarded Outstanding Investment House award by Morningstar's U.K. analysts for the last two years, as well as manager Graham French winning Morningstar Europe's Fund Manager of the Year: Global Equity in 2011.)

At a recent Ignites Europe conference for asset managers in London, Mackay outlined how investors used to focus a lot more on fund products and pricings when they made their investment decisions. Brand was not a main consideration. But now, whilst having a good product offering with solid performance is still of paramount importance, branding has become even more important. It’s easier to sell a well-known brand in the fund business, she explains.

According to the report's findings, BlackRock currently has the strongest brand in Europe because the firm is seen as solid, it is considered a key international player and it has an appealing investment strategy. Other factors that contribute to a strong brand include: stability of investment management teams, client-oriented thinking and the ability to quickly adapt to market changes.

European Brand Ranking
1. BlackRock
2. Carmignac Gestion
3. JP Morgan Asset Management
4. Fidelity
5. Schroders
6. Pictet Funds
7. M&G Investments
8. Franklin Templeton
9. Invesco
10. DWS

U.K. Brand Ranking
1. M&G Investments
2. Invesco
3. Schroders
4. BlackRock
5. Jupiter Asset Management
6. Fidelity
7. JP Morgan Asset Management
8. Artemis
9. Investec Asset Management
10. Aberdeen Asset Management

The Fund Buyer Focus report was created using surveys with over 900 fund selectors of third party funds in Europe. Third-party funds selectors in Europe, who help investors choose the correct funds to suit their investment goals, account for EUR 2 trillion in fund assets.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.

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