I have written a lot of obituaries for the Indian mutual fund industry….let us see what an American Investor pays for investing in a mutual fund.
Most American investors go through a Broker-Dealer or a financial planner who acts as a B-D. Forget the myth of a fee-based financial planner – he is as difficult to find as Santa Claus. Perhaps he is accessible only for a minimum fee of $ 5000!
So first he goes and puts his money in a Wrap account with a broker dealer. The B-D then charges him a 5.75% ENTRY LOAD and a 1-3%p.a. as management fee. Then the money gets invested in a mutual fund which charges him about 1% (all right even as low as 0.76%p.a.) as asset management charges. This is true even if it is a debt fund. GOD BLESS THE AVERAGE American!
The day the Indian asset management companies decide to go the USA and offer asset management services at our costs – we can beat them hollow.
The amount of vested interests in the US financial system is soooooo deeeeeeeeeepppppp that there cannot be anything cheap in the US. Hey Obama forget Medical reforms, first reform your financial services sector. Just open it our Gujjus, Chettiars and Marwaris – and soon they will be dominating it like they are dominating the steel industry. God bless.
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