Recently AMFI
(Association of Mutual Funds in India), the industry association body of asset
management companies in India, was in news over politics between clashes amongst
its small/new players and the bigger/established ones.
The matter was
related to the proposal that AMFI, allegedly was to make to SEBI, to tell it to
form rules abolishing/banning upfront commission by fund houses to its agents.
Fund houses,
especially the smaller and newer (among many others) are paying between 1-3%
commission from their own pocket to increase investors and their AUM (Asset
Under Management- the value of total investment in all schemes with the fund
house/amc)
These smaller fund
houses/AMCs complaint that the AMFI was acting in favour of the bigger and
established players, who can sustain without paying upfront commission to
agents as they have established agent network and huge AUM sizes. Persons
familiar with developments also said that these smaller AMCs warned AMFI of disassociating
themselves from AMFI and forming parallel association. To tackle issue, it is
said that AMFI has replied that if SEBI arbitrarily comes up with norms similar
norms then they will not be able to help. An indeed diplomatic step suggesting
association politics. The smaller fund houses manages 500 to 5000 crore rupees
AUMs while the bigger funds have bigger AUMs.
There are 44
registered AMCs which all are members of AMFI. It is noticeable and worrisome
that at a time when declining AUMs (down close to 20% at below 6 lakh crore
from above 7 lakh crore in less than 3 years) and number of mutual fund
investor folios, the industry should in fact unite to bring in more inventives
for agents and investors alike to increase participation of common population
in Indian equity markets; and not do internal politics.
