by Mr. Gopalakrishnan V, Askgopal.com
We all splurge on personal gadgets, personal
clothes & accessories, electronics & many other items through
e-commerce sites such as Amazon, Flipkart, Snapdeal and many more.
If SEBI,
the market regulator has its way, we may soon have the mutual fund schemes
available through those e-commerce sites.
For a change, e-commerce sites will help us save
money rather than make us spend money through their mouth watering offers
coated as savings.
The phenomenal growth of the e-commerce industry
in the last few years has definitely caught the imagination and the attention
of the regulator which wants them to take the MF schemes to general public as
one more buying channel.
Despite mutual funds’ existence for the last
several decades and despite the presence of major foreign and domestic private
sector players in the mutual funds industry since early 1990s, mutual funds
products still remain one of the least invested financial product in the
country for reasons which are many.
In the overall household savings, equity
investments rank among the lowest in India.
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| Mr. Gopalakrishnan V, Askgopal.com |
And within that, mutual fund
investments rank much lower than what it should be, for the simple reason that
mutual funds are the most convenient low cost products for an aam aadmi
investor who wants to invest in equity markets.
With the revolutionary concept called SIP, the
convenience of investing in mutual funds gets even more easy and
convenient.
Let’s look at the pros & cons of investing
through e-commerce sites –
Pros -
The major advantage of the e-commerce sites is
the ever expanding online reach. We all open the e-commerce sites very often
than any other site in our day to day life.
Even if we do not buy goods we still visit the
sites for the curiosity factor and to know the latest product offers.
With the advent of apps we browse them and buy
through our handsets. Some of the sites, such as Myntra has gone on “app only”
mode, given the high degree of mobile data penetration in the country, which is
all set to grow at a rapid pace in the future.
Linking the mutual fund products into the e-com
sites will definitely catch the attention of young and savy savers who may end
up buying them than buying through the offline channels.
And more so for people whose job restricts them
to a confined campus for the whole day. Mutual funds as a category may find new
investors who otherwise find it inconvenient to invest through offline
channels.
For the investors, it becomes easy when they get
mutual fund schemes in their own preferred mobile e-com app.
Cons –
While it all appears to be easy to be bought
through e-com sites, it may not be that easy and it may actually be cumbersome
on fulfillment of the processes like KYC and others before buying mutual fund
products through these sites.
SEBI has laid down lot of restrictions for the
mutual funds on the way they are marketed and sold, largely to protect the
investors interest. For example, schemes are coded in various shades to
highlight the risk levels of the schemes.
Given such high levels of precaution, one will
find it tough to imagine as to how can the products follow due controls while
being bought or sold through the e-commerce sites.
More than the processes, for the investors,
mutual funds are need based and advisory based financial products and such
products find place in one’s investment portfolio purely based on one’s
financial goals & objectives.
They certainly cannot be bought like a mobile or
a camera through the e-com sites.
End of the day, there is a whole world of
difference between buying a mobile and buying a mutual fund scheme through
these sites. Yes, the cost of investing may be little through e-commerce sites.
But the Investors should definitely keep their
future financial goals and are better off if they go through a credible
investment advisor before actually buying through these channels.
Way forward -
While offer of mutual funds through e-com sites
is a laudable and path breaking idea, it is still in the stage of discussions
with many milestones to be crossed.
On the other hand SEBI and the government should
focus on strengthening the traditional offline channels like Indian post which
has a mammoth network of 1.55 lac post office branches with lacs of staff
manning them. And interestingly 90% of them are located in the rural areas,
which are still a long way in catching up with the digitization process.
And their savings coming through mutual fund
route will only strengthen our capital markets, which are largely in the hands
of the big foreign investors.
Moreover our country is a complex nation given
its size and the vast distribution of people all across and it becomes
imperative for facilitating the reach of such financial products to them
through multiple channels along with new channels like e-commerce sites.
Contact Details
Mr Gopalakrishnan V
Founder & CEO
Money Avenues
ASKVGOPAL@gmail.com
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