MFDF Insights: Why Marketing Matters for Registered Funds
MFDF recently hosted a webinar titled: From Awareness to Assets: Why Marketing Matters for Registered Funds. Fran Cashman, Morgan Stanley Funds independent director and MFDF Board member; Elizabeth Coogan, Senior Marketing Manager at Nasdaq, U.S. Equity Derivatives and ETF Listings; and John Krieg, CFA, CAIA, experienced fund director and audit committee financial expert, joined MFDF to share their expertise.
The presentation addressed the following questions of interest to fund directors.
Q: Why should directors care about fund marketing?
A: Fund marketing is important because it directly and measurably impacts fund inflows through increased investor attention, search behavior and allocation decisions. In essence, marketing can multiply the visibility and credibility of asset managers and enable them to turn awareness into assets. From a regulatory perspective, directors are responsible for approving the fund’s distribution agreement, which must be reviewed and approved annually after the initial two-year term. In addition, in order to pay distribution fees, directors must review and approve fund 12b-1 plans, if applicable. State law duties including the duty of care and loyalty also apply to director oversight in the context of marketing.
Q: What factors can directors consider when evaluating the fund marketing processes, policies and procedures?
A: Directors can enhance their fund distribution oversight through the development of an understanding of: the adviser’s marketing strategy; the fund’s peer group environment; the capabilities of competitors; the implementation of compliance policies and procedures; and the general efficiency and effectiveness of the fund’s distribution agreement.
Q: What are some key questions directors might consider relating to their oversight of marketing regulatory compliance?
A: Questions include:
- How is marketing rule compliance monitored to determine whether investor-facing materials are accurate and timely?
- What processes are used to determine whether marketing materials accurately reflect product costs, complexities and risks?
- Are there protocols or systems in place to prevent inconsistent or conflicting messaging?
- How are materials tailored for different intermediary channels? What due diligence is conducted on intermediary marketing practices?
- Are disclosures appropriately handled across media formats?
Click here to watch the webinar archived video.
Click here to access the presentation slide from the webinar.