MF Utility to be sold?!!

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.

MF Logo:
MFU Logo

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"?

To summarise

  1. A change in MFU management appears imminent.
  2. 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.
  3. If you are thinking of applying for an MFU account, I would suggest that you wait and see how things pan out.
  4. 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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7 thoughts on “MF Utility to be sold?!!

  1. Sundararajan Srinivasan

    If this is true, then it is clearly an attempt to throttle the direct business. Given the fact that the ownership of MFU is with all the Mutual Funds, maybe the heat from the distributors is causing them to think of this...
    Hope AMFI and SEBI will look at alternatives to keep an equivalent light weight option open for the direct folks.
    Of course they can always claim that the earlier option of knocking at the door of each MF is still available for Direct, but that will be a shame!
    Maybe we should have an ability to petition...

    Reply
  2. Arup

    Thanks for the update. We (present & potential MFU users) should be aware of this news. However, since there are so many possibilities, it's unnecessary to worry about any thing at this stage. As pointed out by Pattuji, changes may be for worse or better. As long as revenue model of MFU is concerned, new owner may think of many other avenues, including advertisement in the portal. Personally, I use to always wonder, how long this free of cost amazing convenience (free lunch ?!?!) will be there for all direct-investors.

    Pattu sir...don't you think new investor need not wait for any development as once they start investing thru' MFU, automatically they get a portfolio no. & registered with respective individual AMC also? Only they need to create a on-line login id & password in respective AMC's portal & can invest thru' their portal also. They need not visit individual AMC office to open direct a/c.

    Reply
    1. freefincal

      If I wanted to get a MFU account today, I will not be in a hurry to get it now. Would rather get an acct with the AMC.

      Reply
  3. r

    At present I use both models so personally no skin off my nose. I think the best option is to have a direct login ID with the AMC itself though this not free of hassles. MF Utility is just the icing on the cake. If it continues to be available for free despite changing hands, that would be great.

    Reply
  4. kamalgarg1958

    Best option is to go through directly with the individual AMCs. It is completely hassle free as far as operations are concerned. The only one time hassle is to get registered with them and open an account for the one time. After that it is completely normal, routine and hassle free.

    Reply

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