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 www.arjunparthasarthy.com – 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 fundsindia.com, 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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