Yesterday, The Times of India Business pages carried an article that BSE is in talks to acquire MF Utilities (MFU) a "shared service" mutual fund transaction portal run by a consortium of 25 AMCs.
While the article reported that BSE declined to comment and "a spokesperson for MF Utilities said he was not aware of the development", it carried a quote from the chairman AMFI that "various proposals have been made". This includes a complete sell-off or a joint venture and BSE is only one player involved.
Therefore it is quite clear that the ownership of the MFU is quite likely to change. This is disturbing news to say the very least.
The MFU is a non-profit aggregation portal that allows three kinds of investors to transact:
- Direct plan investors with no intermediary
- Direct plan investors with a registered investment advisor as intermediary who does not get any commissions from the AMC
- Regular plan investors with a distributor as an intermediary. They commissions from the NAV of the mutual fund invested in.
"Investor empowerment" is a key objective of the MFU and true empowerment is conflict-of-interest-free transactions. If the MFU is sold or is run jointly with someone else, can one invest directly with no intermediary? This is a valid fear, but as of now, we can only speculate. At the time of writing MFU CEO, V Ramesh has not (yet?) responded to my tweet about this.
My guess is, the present system may not change .. much. However, will there be a fee involved?
As of now, the business model of MFU is clear. They bring in the business to the 25 participating AMCs and therefore can remain free. But how will a third party be compensated?
The biggest positive for the MFU is its support system. V Ramesh has been extremely pro-active in solving issues for investors. Makes you want to wonder how a change in ownership will impact 'direct' support.
However, things could change for the better too.
At present, MFU is an extremely low-key operation as they do not want to antagonise distributors who are threatened by direct plans (among other things!). It is so low-key that finding a log-in button is hard!
Also, there is no online registration facility for KYC enabled investors. In this day and age, this is a big lacuna.
Perhaps the new management will increase visbility and be more investor friendly in this regard in order to "get more business"?
- A change in MFU management appears imminent.
- While we need to "wait for clarity from AMFI" (à la Ashal Jauhari), there is no need for present MFU account holders to think of the worst. Their present transaction via MFU will not be affected in any way and they can always revert back to individual accounts with AMCs at any time.
- If you are thinking of applying for an MFU account, I would suggest that you wait and see how things pan out.
- In the meanwhile, consider getting an account "directly" with the AMC. It is not an ordeal!
Acknowledgments: With inputs from Balaji Swaminathan and Anish Mohan.
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