A few days ago I had spoken about the ‘Honest truth’ – Ajit Dayal (who runs a mutual fund and a big mutual fund distribution business) is the author. He has recently written about the ET discussion on mutual funds. He sounds a little sore about not being called to the summit. Surprising, because the media makes its money from Advertising. It is surprising that non advertisers are not invited – LOL.
Ajit Dayal’s fund does not pay the distributors, but pays the others in the chain, I presume. The fund manager gets a salary. The R&T agent (if any) must be paid. The ‘sales staff’ must be paid….only the distributor is not. Does it mean the final customer (unit holder) gets the ‘cheapest’ fund. NO. The answer is no. The asset management charges (on the aum) is one of the highest in the industry – 2.49 vs. 2.5 allowed by SEBI. The fact that Quantum does not pay commission is not being translated into lesser charges for the end customer!
The end subscriber needs a good index fund with low asset management charges – say 0.009% per annum. Is it feasible to charge so low? Of course it is possible. If all of us come together to form a ABC C0-operative Mutual fund co. (or what is called a mutual mutual company!!) – if you think the charges are high, buy the shares of the fund. If you think the amc charges are low, invest in the fund!
Till we do not do something like this, we need to keep looking for good well managed funds whose managers make money when you and I as unit holders make money. Seeing the quality of fund managers, the rush to build ‘aum’, the nfo sharks, ….you need to be lucky if you are not dripping in red.
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