“Mutual funds are no longer profitable”; “It is not worth being in the life insurance business”
– you have heard this and variants of this from the ad driven media, right?
Well the truth is not very close to this. Let us take the case of Hdfc Mutual fund. Given the huge AUM already under its belt, it has an annual income in the region of Rs. 350 crores. Not bad at all, right?
What about the life insurance companies? Well, I do not have authentic AUM figures…but let us say Hdfc Life insurance has about Rs. 40,000 crores and Icici Prudential has about Rs. 80,000 crores. In case of the life insurance business, assuming a 1.5% asset management charges, these companies have about Rs. 600 crores and Rs. 120 crores.
The best part is that the figure will keep on growing. Why? simply because people have started believing that unit linked plans are for longer period, while some have forgotten about it. For those people for whom it is going through a standing instruction plan – they may just be too lazy to stop it!
Also life insurance companies make a greater effort to RETAIN the investor unlike a mutual fund. MFs do not even know why you are withdrawing…let alone making an attempt to stop you.
Why do you think are the life insurance companies and mutual funds cribbing about profitability?
Simple they are not as profitable as their big brother – commercial banks!!
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