One more electronic platform?

‘Why can't we hold all our mutual fund units in a single account and get a bird's-eye view of all our holdings through a single statement?'

This has been the plaintive cry of mutual fund investors, ever since this investment vehicle took off in the early nineties. But it has largely fallen on deaf ears. Fund houses have instead applied themselves to launching and managing a dazzling array of products. As a result, investors holding more than one scheme have had to juggle multiple forms, service centres and account statements. It is only in the last three years that it has become possible for investors to transact across mutual funds through a single electronic platform. New transaction portals, such as www.fundsindia.com, allow buying and selling of mutual funds.

Internet equity trading platforms such as HDFC Sec and ICICI Direct have also added mutual funds to their product menu. Private banks, too, have opened fund subscriptions on their portals. And both the BSE and NSE now offer separate platforms for mutual funds bought via exchange members.

MUTUAL FUND ASSOCIATION

The Association of Mutual Funds of India (AMFI) is now considering a new online transaction platform for mutual funds. This platform will be integrated with depositories such as NSDL and CDSL, so that investors can hold units in demat form. It will also be plugged into the registrars who process mutual fund transactions to expedite processing. AMFI's platform may score above the rest on two counts. One, it may offer the complete menu of products from across the 40-odd fund houses. Most other online platforms offer a restricted choice of products, depending on if they managed to ink the relevant tie-ups with 40 different fund houses.

Two, it will allow you to transact in mutual funds even if you aren't a stock market investor. Existing platforms offered by the stock exchanges or its brokers offer mutual fund products as an add-on to equity trading facilities. They require you to route your transaction through a stock broker and shell out brokerage, while MF transactions outside of these portals don't entail such costs. What is more, brokers earn revenues from frequent transactions, while mutual funds are a buy-and-hold product. They may, therefore, display limited interest in selling these products. The AMFI portal, by focusing exclusively on mutual funds, may solve these problems. But even the AMFI initiative comes a little late in the day. Given that nearly 15 years have passed since the first private mutual fund house started operations, most of us have already invested in a range of schemes scattered across many categories and fund houses.

Transferring all of these to a new trading platform may be a time-consuming exercise. It may involve correspondence with each fund house, and transferring all the existing units from the offline mode to a new demat account.

FIRST-TIME INVESTORS

The new portal may, however, ease the way for first-time investors in mutual funds, who can enjoy a single-window experience. However, what if the industry has already tapped most investors in the top cities with access to the Internet?

Then, what new investors will need, isn't an electronic platform for transacting in mutual funds, but actual branch offices that sell all fund products under one roof. Independent financial advisers, who aren't affiliated to any one fund house, appear to be the best bet to get this distribution network up and running.

Maybe, what AMFI needs to do is to invest in infrastructure facilities that put those feet on the street.

Queries may be e-mailed to >mf@thehindu.co.in , or sent by post to Business Line, 859- 860, Anna Salai, Chennai 600002.

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