Advertisement
Wednesday, Oct 20, 2021
Outlook.com

Operational Losses Ahead

Could this be finis for small mutual funds and AMCs?

Operational Losses Ahead
Operational Losses Ahead
outlookindia.com
-0001-11-30T00:00:00+05:53
However well it performs, an Asset Management company (AMC) managing a small corpus of funds cannot make a profit if the SEBI committee's recommendations become regulations. "With such management fees, it is more profitable to be a custodian or a registrar today than to be a fund manager," says Vijay Advani, country manager of Templeton Fund. Indeed, according to Outlook 's calculations, for a hypothetical Rs 50 crore fund, even with a 10 per cent growth in NAV over a year, the AMC would get 0.92 per cent as its management fees while the custodians and the registrars together would get a fee of 2.62 per cent of the corpus. Consider a Rs 50-crore fund with 83,333 investors, the average holding for each being Rs 6,000. In the first 12 months, the NAV grows 10 per cent, a good growth rate under current market conditions. Therefore, the average NAV for the year is Rs 52.50 crore. The following are the mutual fund's expenses, as per the SEBI committee's recommendations:


AMC’s Basic Fee     Rs 42,00,000           0.80%...

Advertisement

Outlook Newsletters

Advertisement
Advertisement
Advertisement

Read More from Outlook

Poonch: Locals Asked To Remain Inside As Army Plans Large Scale Operation To Hunt Down Militants

Poonch: Locals Asked To Remain Inside As Army Plans Large Scale Operation To Hunt Down Militants

Indian Army's operation comes as a retaliation to the October 11 killing of an army officer and four soldiers during an encounter in Poonch sector.

LIVE: Uttarakhand Rescue Operations | 11 Trekkers Go Missing

LIVE: Uttarakhand Rescue Operations | 11 Trekkers Go Missing

At least 46 people have died in rain-related incidents in Uttarakhand so far. Union Home Minister Amit Shah will be visiting the state today.

T20 World Cup 2021: India Thrash Australia By Nine Wickets In Final Warm-up Game

T20 World Cup 2021: India Thrash Australia By Nine Wickets In Final Warm-up Game

After restricting Australia to 152/5, India chased down the target in just 17.5 overs. Catch highlights of IND vs AUS, warm-up match here.

Lakhimpuri Kheri: Supreme Court Asks UP Govt To Speed Up Investigation

Lakhimpuri Kheri: Supreme Court Asks UP Govt To Speed Up Investigation

The Supreme Court asked the Uttar Pradesh govt to record statements of remaining witnesses in the Lakhimpur Kheri case.

Advertisement