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Deepak Shenoy @deepakshenoy
, 7 tweets, 2 min read Read on Twitter
From Pattu about free direct plan fund websites and how they could have a hidden agenda:… I have a few things to say here.
I think this is as valid a complaint as Flipkart selling products cheaper than market prices (and losing money doing so). Flipkart got sold for some 20 billion or close despite not making profits. So, yeah, there's value in just getting a customer base now.
If a payTM or Kuvera or Zerodha offer this as a service for free, they arechoosing to lose money. If they go under, do your investments get lost? No. The MF ecosystem in India is watertight, and you automatically have access to your funds through the fund house.
So, the free part doesn't even restrict you from using another platform, or the fund house itself, to sell the fund you bought on one platform. Meaning, there's no lock in. Zerodha is the only one charging you a demat fee; the others can't charge. This is great for you.
There's no need for SEBI to get involved right now, unless they find that AMCs are paying such websites through some backended process. Like they can compensate a different arm of PayTM etc. This happens even now (see how many ways HDFC or subsidiaries gets= paid by HDFC AMC btw)
So if you plug that loophole, half the current big players will get hit and hit hard. I doubt SEBI will take any action, so we'll have to deal with one thing: Direct plan sites will cost AMCs a lot less than distributors, but it will cost them some.
When all your competitors are offering services for free, you either get the money bags or get out of that business. This is going to be a long game of waiting. Meanwhile, I can't see downside for a buyer of mutual funds who pays nothing.
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