Mutual fund distributors earned Rs 6617 crores in commissions in FY 2020-2021

[rupeshmandal]

@rupeshmandal

Even in case of death, the nominee can go for MFU single window. Currently, some of the processes are offline. But MFU is making the process online as we speak .

A correction to my earlier statement:
MFU doesn’t serve as a single window for nominee in case of death of investor. The correct information is that the proposal is still pending and yet to be implemented. This tweet clarifies the doubts around the subject.

[UpperCircuit]

@Bhuvan

Quite the opposite, you can manage all your investments in one single place as opposed

@Bhuvan

to manage your stocks, bonds, ETFs in one place vs MFs in another place.

There’s not much to “manage” in MF. You start a SIP and then you don’t do anything for a year or several years. You may sometimes do a lumpsum investment and then you don’t have to do anything for several years. NSDL sends you a consolidated statement of all investments (including those held in CDSL demat accounts), that gets the job done. This reason is of negligible importance to hold MF in demat.

@Bhuvan

You have a single nominee for all your investments

You can do the same for MF through MFUtilities. Besides, you would generally change the nominee only after a major life event (you got married, had children, etc.), but this is not something you do on a regular basis.

@Bhuvan

makes pledging, obtaining loans easier

While true in principle, these are again not activities you do on a regular basis. (If you’re pledging and taking loans on a regular basis, you’re having bigger problems, and the question of where you hold MF is trivial in comparison.)

@Bhuvan

makes rebalancing easier

This reason has perhaps the most merit out of all the stated reasons, but once again, it’s an activity that doesn’t happen frequently (maybe once a year or even less frequently). (Unless you do day trading gambling, but that’s not of any significant importance.)

@Bhuvan

You can instantly pause/resume/modify your investments anytime

Ok, good to hear that. The last time I checked some years ago, this wasn’t possible, maybe things have changed since then.

The “SIP as series of lumpsum” approach doesn’t work, for example, in funds where lumpsum investment is suspended (an important one in this category currently is the SBI Small Cap Fund).

That aside, the benefits (if any) of introducing another middleman in the MF game are hardly significant, in comparison to the cost you may have to pay when things go wrong. It’s way too common for the different middlemen to say “not my problem” and force the customer to followup with multiple middlemen to get their own money. Some middlemen such as AMC and Depository cannot be avoided, but at least avoid the ones you can.