Arjun Parthasarthy – i think used to be a debt fund manager with IDFC mutual fund, and I have spoken to him a couple of times, long long ago.

Now he runs a website – I have not yet visited the site, but I found an article in DNA money authored by him. In this article he says the mutual fund industry should go electronic – so as to add value to the customer. Fantastic idea. To the best of my research no debt fund has ever beaten a government debt scheme especially over a long period of time, like say 7-8 years. The only advantage that a debt fund has over a bank fixed deposit is the annual TAX FREE compounding – you put money in a growth plan and do not withdraw for say 10 years, the impact of compounding is just too good. The reasons are obvious – the fund charges hurt. As the corpus keeps going down, the costs goes up. So suddenly a scheme which had 4k crores sees it corpus tumbling and therefore costs going up. Charges hurt, Mr. Fund Manager. And really cuts deep in a debt fund. Even 1.25% hurts when the current yield is just 8-8.5%p.a.

He says by going electronic the fund industry will save money for the customer. It beats me. Completely beats me. If I go to the website of a fund house and invest directly (which ALL fund houses allow) I can save money. Also if I give a standing instruction to my bank, my transactions are electronic, is it not? There are 55 lakh SIPs now currently live in India (no way I can know the accuracy of this claim, but I am just parrotting figures from the industry – which itself has no mechanism of knowing whether it is right). All this is electronic. STP is electronic.

If Mr. Arjun Parthasarthy thinks by going the demat way the fund industry will add value (or reduce costs), I would love an explanation.

As would Srikant of, Sucheta Dalal and Debashis of Moneylife, a couple of journalists from Moneycontrol, from ET, maybe Mitra Joshi of Cnbc….

thank you sir…

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  1. There is no such website! Many of us have sufficiently written about this. Remember your camel and tent story. May be these folks are related to or admirers of camel!

    I wish some one talk to regulator about this. May be Ms.Sucheta & Mr.Debashis would be able to this.

    Would be interested in fasting to create awareness as this seems to be the current national trend?!

  2. Errata – As a participant in marathon, I wanted to know whether you would be interested in fasting?!

    I’m counting myself out. I don’t even walk regularly.

    If authorities are keen in demating the demat, what a small speck like me can do? Become the part of the system?!

  3. I am not here to change anything. If I fast, it will be for MYSELF. Clearly Ayn Rand at work. The sheer Virtue of Selfishness. How does it matter to me if the MF industry becomes polarised and there are only 5 fund houses at the end of say 5 years? God bless Amfi, the distributors and the investors.

  4. Good to know the Ayn Rand part. From some of the earlier postings, I thought you’ve totally moved away from Ayn Rand’s influence.

    I take efforts in doing things I consider appropriate. I’ve stopped worrying about the outcome. It’s sheer waste of time.

    With 43 AMCs, 5000+ really active IFAs , 8 million investors, less than 2 lakh crores equity AUM, this industry is already tiny.

    With your prophecy of 5 fund houses, after 5 years….??

    Going by the trend so far, it looks like God is in no hurry to help this industry. May be the industry is going through 71/2 years Sani Dasa!

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