Fund Companies Increase Ad Spending 52% in First Quarter

Mutual fund companies are emerging from a slump in advertising spending and buying more print advertisements and commercials in finance magazines and cable television channels, Dow Jones Newswires reports.
Despite ongoing scandals that for the past year have sullied the mutual fund industry's image, individual fund providers are again ratcheting up their marketing efforts. Janus Capital Group and Putnam Investments, two companies that recently settled misconduct charges with regulators, have both launched costly advertising campaigns in the past few months. Janus' new campaign, which promotes long-term performance, cost nearly $4 million.
Spending for advertisements promoting IRA rollovers, long-term investing and 529 college savings plans soared to $269.5 million during the first quarter, a jump of 27.7% over the same period last year. Mutual fund advertising rose by 52% to $46.3 million during the same period, according to Competitrack.
Industry experts attribute the rise in advertising spending to the economic recovery that began last year. But others believe the advertising blitzes may be ill-timed because stock and bond markets are now losing steam. Financial Research Corp, also questions the effectiveness of big-budget advertising and notes that sales were strong last quarter at companies with minimal advertising expenditures, such as American Funds and Vanguard.