Comment on Introducing Coin - our Direct Mutual Fund Platform
commented on
29 Mar 2017, 09:23 AM
Hi Nikhil,
Great job in cutting distribution industry overnight. India has too many middlemen everywhere. We need companies like yours to get rid of the fat.
Rs 50/month a months sounds high by Zerodha standards. Average difference between expense ratios of direct and distributor plans is about 1% for equities and 0.5% for debt. If someone is doing Rs 10,000 SIP per month with 50% going to debt and 50% going in equities will save about 0.75% in expense ratio or about Rs 75 every month. He will pay 50 to you plus any demat charges. You guys are not known for hidden charges so I am not counting those. Essentially beyond 10k / month one starts to save. Convenience of one stop shop is what you guys are offering at this price which is worth much more than 50/month.
I have one question though. I have both equity and MF units in my demat and I frequently switch between equities and debt depending on valuations and opportunities in equity markets. Today, I can sell my equities and by MF on the same day but I have to wait for MF payout before I can buy equity. Can you address this anomaly?
Ideally, you should let clients sell MF and buy stocks on the same day as payout of MF will happen on the same day as pay-in of stocks so these two should settle together.
Even if MF payout is after stocks pay-in, you should provide margin funding for those days (should not be more than 2-3 days or even less for liquid funds). This will help clients take advantage of opportunities in equities and you will earn interest.
Long long term investors regularly move between equity and debt depending on valuations and opportunities in equity markets. However, if I have to wait for my MF payout before buying stocks, the opportunities in stocks will go away (or substantially erase) as stocks are much more volatile than debt funds. Its high time technology brokers like Zerodha do seamless settlement between various entities.
As a broker, you should provide seamless transactions across all the securities (equities, derivatives, MF, currencies and commodities etc) irrespective of which entities these transactions are settled with.