Mutual Fund’s Industry

What will be the future of MF’s industry?

Specifically, what will be the future of actively managed MF’s?

MONEYDHAN INVESTMENT ADVISORY

As SEBI registered investment advisors, we at www.moneydhan.com cannot make you exit or Invest without proper due diligence.

India is at the lowest among countries as MF assets wrt to GDP (2019 data)

So as a statement, we say this is the underpenetrated sector. Potentially multi-bagger opportunity we can expect for MF Stocks. Let’s recap what happened to past IPOs

1) Reliance Nippon Asset Management Company:

81 times oversubscribed Listing gain was 20%

NOW

1) Reliance Nippon Asset Management Company:

3% return (since Nov 2017)
Max Drawdown : -52%

2) HDFC Asset Management Company:

83 times oversubscribed Listing gain was 65%

NOW

2) HDFC Asset Management Company:

12% (since Aug 2018) Max Drawdown: -25%

Customers show an inclination toward passive funds than actively managed funds. As passive funds are simply mirrored funds of indexes which removes the need for fund managers.

Investors got to know that directly paying 1% of AUM as a fee for fund managers eats a big chunk of their returns. New investors are with the supplement of information.

• The reaction of investors affected the financials of MF asset management companies.

• To reduce the effect MF industry introduced more passive funds in the market, but still struggling to be profitable since the fee’s Income is low.

• Note to make, even if there is a high AUM that doesn’t guarantee the profits for the company.

Struggling companies
increased their fees on
passive funds by 100%

SEBI allows them to charge up to 1% of total assets.

Currently, funds charge around 0.30% – 0.50%

So, there are enough chances that fees will increase more and more in the coming years. The investment industry is getting expensive by hiking the expense ratio.

However, without skin in the game. They receive the fee even if the customer doesn’t make a profit. The expense ratio ensures fixed cash flow for companies.

So, MoneyDhan asks, for 10% of the profit share

10 thousand for every 1 lakh profit

or,

1.25 lakh as maximum fees if you make

12 lakh profits whichever is lower, in the client’s favor.

Sujith ⚡ Investment Advisor SEBI MoneyDhan.com Investment Advisory
Twitter: @REALmoneydhan
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