Very funny question is it not?

A real good and honest fund house should be interested in getting good fund managers and having good performance. It should not matter how much of funds they manage.

I expect there to be some consolidation in the industry. A few small fund houses SHOULD seriously re-consider being in the business. Should a fund house be in this business with say Rs. 5000 crores AUM? does it make sense?

CEO, CIO, Head of compliance….are not going to take a cut in salary. So how much does a fund house with Rs. 5000 crores aum earn?

Gross about 1%? so about 50 crores?

Why should they do this business? I think it is much easier to earn Rs. 50 crores doing something else with much lesser stress.

I expect to see consolidation soon. I can even guess the names of companies who will go out of this business.

What will happen to small distributors?

They will have no choice but to do ‘sharanagathi’ to some big consolidators. Not that consolidators like me, but I guess their job becomes easier.

A fresh IFA will have to come in as an understudy or as a junior partner with a big IfA (who has to decide which 3 alphabets he has to choose) and then do what he/she wants to do. LLP and private companies will now become nice organisations to keep ‘arms length’.

The number of mutual funds will reduce, the number of IFA/ RIA/ MFD will go down and consolidation will happen.

The big will get bigger, and the rich will get richer.

The smart people in the industry would have benefited at the cost of dumb, obedient, people.

That is how consolidation happens.

A new head in the regulator body will be taking credit for some butterfly flapping its wings in Brazil and our Aum going up.

Speaking of aum, I guess we will soon see a de-growth in the industry.

Oops.

I just saw some big withdrawals going out from bond funds to buy bonds issued by a builder. This was an amc kinda product being offered by a ‘wealth’ company.

The yield to the client? 11% taxable.

The fee to the ‘wealth’ company? 3%.

I am sure I know why it is called a wealth company.

Enjoy this space.

I am off to do some Sales Training – I have a hard days work preparing the material. Me and my big mouth.