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kulman
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 9319
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   Posted: 17/Dec/2007 at 10:14pm |
These will be very exciting times for qualified & experienced people in Finance, Capital Markets.
Devesh....finish your studies as fast as possible.
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Life can only be understood backwards—but it must be lived forwards
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deveshkayal
Senior Member
Joined: 04/Sep/2006
Online Status: Offline
Posts: 3903
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Posted: 17/Dec/2007 at 10:21pm |
Devesh....finish your studies as fast as possible.
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I see TED as a serious threat to my career. After joining this forum, investors are pulling out money from MFs. 
Edited by deveshkayal - 17/Dec/2007 at 10:22pm
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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omshivaya
Senior Member
Joined: 06/Sep/2006
Location: India
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Posts: 5966
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Posted: 17/Dec/2007 at 10:31pm |
In fact, I envisage a day when channels and brokerage houses are somehow & sOmeway going to come hard on TED, that is try to find faults with it...to discourage investors from coming and elightening themseleveS here.
The only thing that is stopping that from happening is scale of TED...just a few years from now I guess!!
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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smartcat
Senior Member
Joined: 29/Mar/2007
Location: India
Online Status: Offline
Posts: 4243
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Posted: 17/Dec/2007 at 11:41pm |
The logic for investing in AMCs seem to be OK, but why aren't AMCs making significant profits? What was the net profit of UTI (which plans to come out with an IPO)? Rs. 100 crores? That's approx. 0.2% of the assets managed.
I'm not too excited about Edelweiss setting up an AMC that will charge 2% as fees. I only like AMC businesses as a part of a large financial company -like in Reliance Capital or Kotak Bank. As a standalone business, I would probably avoid them.
The gain/loss in market cap of AMC stock is directly proportional to the gain/loss in the index. And this is the proof -
Amount in Cr as of Nov 2003 : 132366
Amount in Cr as of Nov 2004 : 149581
Amount in Cr as of Nov 2005 : 204519
Amount in Cr as of Nov 2006 : 341378
Amount in Cr as of Nov 2007 : 537943 |
Now check what was the Sensex value in Nov 2003, and what it is now.
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Vamsee
Senior Member
Joined: 09/Dec/2007
Location: United States
Online Status: Offline
Posts: 149
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Posted: 17/Dec/2007 at 1:52am |
Basant ji,
Quality fund managers are very much a scarce commodity
Its going to get worse in future. The problem is once a fund manager becomes a “star”, he would simply start his own hedge fund which is much more lucrative for him.
Devesh ji,
The retail guys have not participated in a big way till now. But it will change. That’s what makes me optimistic about this space. We at TED are focusing on this before everyone else.
Reg UTI MF IPO, I have my reservations regarding UTI. Their past doesn’t inspire confidence in their integrity or intelligence!!!
Smartcat ji,
Not so fast. Do not forget the scalability factor. The AMC’s can easily manage 10 times or 100 times the current size with out significant scaling up in resources. That means the entire amount earned would directly go to the bottom line. Expect a lot of ten baggers in this space *if* the big financial companies spin off their AMC businesses.
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Mr. V
Senior Member
Joined: 01/Mar/2007
Location: United States
Online Status: Offline
Posts: 903
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Posted: 17/Dec/2007 at 2:56am |
Originally posted by smartcat
Amount in Cr as of Nov 2003 : 132366
Amount in Cr as of Nov 2004 : 149581
Amount in Cr as of Nov 2005 : 204519
Amount in Cr as of Nov 2006 : 341378
Amount in Cr as of Nov 2007 : 537943 |
Now check what was the Sensex value in Nov 2003, and what it is now.
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As Devesh has pointed out, the above figures include debt component which would be significantly higher than Equity. I won't be surprised if Equity-Debt ratio is 1:3 or 1:4
I think AMCs also charge an annual fee based on the total AUM. So theoritically in a bull market, the AMC would generate more profits without even selling any new MF units.
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smartcat
Senior Member
Joined: 29/Mar/2007
Location: India
Online Status: Offline
Posts: 4243
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Posted: 17/Dec/2007 at 9:08am |
Vamsee, the scalability factor looks good on paper, but scaling up would mean collecting 10 - 100 times more funds. But in India, remember that an AMC has to compete with 100 other AMCs, fixed deposits, post office deposits, PPF, insurance companies, gold and chit funds for the same money.
What happens in developed countries might not necessarily happen in India. Our savings attitude and avenues are different.
V, no AMC will launch only equity funds. They will launch a number of debt funds too, whose assets (and hence fees) will grow at 6 percent per annum. That means the net profit from the non-equity division will grow at 6% per annum (assuming, for simplicity, that the funds remain the same) - that's lower than FMCG companies' growth rates.
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deveshkayal
Senior Member
Joined: 04/Sep/2006
Online Status: Offline
Posts: 3903
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Posted: 17/Dec/2007 at 11:35am |
Originally posted by Vamsee
Reg UTI MF IPO, I have my reservations regarding UTI. Their past doesn’t inspire confidence in their integrity or intelligence!!!
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I dont think any UTI fund ranks among the top ten but their AUMs are still increasing. Wonder how ?? Are investors investing blindly into their funds ?
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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