Association of Mutual Funds in India (Amfi) is reviving an earlier proposal to launch an online platform which will help distributors and financial advisors transact mutual fund schemes across sales channels. The "front-end" portal will link the stock exchange fund platforms and also enable investors to buy or sell schemes directly from any of the registered 41 mutual funds, according to fund industry sources.
By planning to link the proposed portal with exchange platforms, the mutual fund industry body is trying to bypass stock brokers, who are not keen to sell mutual funds, industry sources said. The wire-frame platform is expected to be functional in six months, the sources said.
Initially, Amfi will ask independent financial advisors (IFAs) and other Amfi registration holders to get empanelled on the online platform. The industry body is yet to work out on aspects such as portal membership fees and site ownership, which are expected to be discussed at the board meeting next week.
"We've plans to start a fund platform, but it's too premature to talk about it now," said V Ramesh, deputy chief executive of Amfi, adding, "It's going to be a non-profit venture. We expect to keep transaction costs at a lower base."
The Amfi platform will help IFAs either transact through the exchanges or link up with fund houses directly. IFAs continue to contribute in a big way to mutual fund sales. According to data from registrars CAMS and Karvy, 45% of equity fund sales were done through independent financial advisors compared to 29% by banks in 2010 -11.
Capital market regulator Sebi, post-entry load ban in 2009, had asked Amfi to design a common fund platform which will allow retail investors to transact, switch over and compare the schemes online through a single window. While Amfi was working on the platform, Singapore-based Ifast Financial launched fundsupermart.com and registrars CAMS and Karvy jointly launched their fund platform 'Finnet'. Chennai-based Wealth India Financial Services also launched fundsindia.com at around this time.
But private online fund portals are yet to take off as expected, with most of them logging just about 200 - 400 transactions daily. "Net-based transactions will take time to be popular among retail investors. We need Amfi-like models to make the channel popular," said Rajesh Krishnamoorthy, managing director of Ifast Financial. "It'll take 3 - 6 years for any online distribution model to turn profitable," Mr Krishnamoorthy said.
The stock exchange platforms BSE Star MF and NSE MFSS, which started in December 2010, are hardly seeing volumes because of broker apathy. For stock brokers, selling mutual funds is not profitable in the absence of volumes. The BSE on an average logs about 193 buy or sell orders worth about 1.79 crore every month while the NSE executes about half the number of trade orders worth about 70 lakh.
Stock brokers get about 0.5% as commission for executing fund trades on behalf of investors. The BSE, according to officials, has 180 empanelled brokers. Out of which, about only 50 are brokering funds.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/amfi-to-revive-plans-to-start-a-fund-trading-online-platform-front-end-portal/articleshow/8754813.cms
By planning to link the proposed portal with exchange platforms, the mutual fund industry body is trying to bypass stock brokers, who are not keen to sell mutual funds, industry sources said. The wire-frame platform is expected to be functional in six months, the sources said.
Initially, Amfi will ask independent financial advisors (IFAs) and other Amfi registration holders to get empanelled on the online platform. The industry body is yet to work out on aspects such as portal membership fees and site ownership, which are expected to be discussed at the board meeting next week.
"We've plans to start a fund platform, but it's too premature to talk about it now," said V Ramesh, deputy chief executive of Amfi, adding, "It's going to be a non-profit venture. We expect to keep transaction costs at a lower base."
The Amfi platform will help IFAs either transact through the exchanges or link up with fund houses directly. IFAs continue to contribute in a big way to mutual fund sales. According to data from registrars CAMS and Karvy, 45% of equity fund sales were done through independent financial advisors compared to 29% by banks in 2010 -11.
Capital market regulator Sebi, post-entry load ban in 2009, had asked Amfi to design a common fund platform which will allow retail investors to transact, switch over and compare the schemes online through a single window. While Amfi was working on the platform, Singapore-based Ifast Financial launched fundsupermart.com and registrars CAMS and Karvy jointly launched their fund platform 'Finnet'. Chennai-based Wealth India Financial Services also launched fundsindia.com at around this time.
But private online fund portals are yet to take off as expected, with most of them logging just about 200 - 400 transactions daily. "Net-based transactions will take time to be popular among retail investors. We need Amfi-like models to make the channel popular," said Rajesh Krishnamoorthy, managing director of Ifast Financial. "It'll take 3 - 6 years for any online distribution model to turn profitable," Mr Krishnamoorthy said.
The stock exchange platforms BSE Star MF and NSE MFSS, which started in December 2010, are hardly seeing volumes because of broker apathy. For stock brokers, selling mutual funds is not profitable in the absence of volumes. The BSE on an average logs about 193 buy or sell orders worth about 1.79 crore every month while the NSE executes about half the number of trade orders worth about 70 lakh.
Stock brokers get about 0.5% as commission for executing fund trades on behalf of investors. The BSE, according to officials, has 180 empanelled brokers. Out of which, about only 50 are brokering funds.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/amfi-to-revive-plans-to-start-a-fund-trading-online-platform-front-end-portal/articleshow/8754813.cms
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