A few days back I wrote a piece saying the “The future of the mutual fund industry is very B…”. Now you could interpret this B as bleak or bright! I have already written about the bright part, now let me write a little about the bleak part.
So here it is….
Since August, 2009 there has been an outflow of about Rs. 7000 crores from the mutual fund industry. Obviously those who have shown past performance to place their own equity at inflated projections are worried. Well…buyer beware. By the way did the buyer not read the prospectus which said ‘Past non performance is not a proof of future non performance’ – well he should have gone through amfi training.
Mr. Bhave has a single point agenda – (like Churchill perhaps) to reduce the size of the midget mutual fund industry. So the next move will be to tax capital gains, dividends and interest as the same (helped by P Chidambaram’s tax code). This will mean corporates will now keep the money in the bank. Period. That will mean another Rs. 200,000 crores will leave the kitty for a start.
NO RETAIL business can survive on a gross margin of 1% – and Mr. Bhave keeps saying that mutual funds are retail products. Tickle me.
Mr. U K Sinha has said that even well performing funds are not doing well now. Seriously Mr. Sinha from when did performance matter? Have you heard of a well writing author or have you heard of ‘best-selling’ author? Most mutual funds run AUM contests – surely boys compare size -performance comes at a later age! Only one mutual fund runs a P&L others do not.
Mr. Sinha also told Sucheta Dalal that the exchange platforms are not good for the investors or the distributors. Hmmm …what about the platform that the mutual fund manufacturer’s club (well one mf called it the big fund houses closed club, well no comments) was to set up? Why was that abandoned?
The manufacturer’s club (which like some politicians is an organization which has no official power but has authority but no responsibility) has some good cash flows created by an ANNUITY of the IFA (who has to pay Rs. 1k a year)…’funeral expenses’ is it? Ifa galaxy, faaida, distributors forum,…all are worried about their income. Investors ki to….vaat lag gayi 🙂
So…well..just a few thoughts..
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