Letter to Editor, Outlook Money sent on Oct 28, 2007

I really appreciate SEBI's move to bring no-load mutual funds. I do not
think the distributors deserve a 2.25% cut specially all they seem to do
is peddle NFOs. Every time I have to meet distributors to renew my
SIPs, they try to influence me to invest in NFOs in large amounts.
They blatantly misguide about the "benefits of low NAV". I have to
request them not to give me any investment advice and just do the
transactions. I feel very bad about shelling out commissions to such
distributors. I will be very happy to invest directly with funds,
bypassing the middlemen.

Secondly, I wonder why the expense ratios are so high in India.
The expense ratios of a typical equity fund is double that of such
funds in developed countries. When we claim to have efficient
stock exchanges with the lowest transaction costs, why are the
expense ratios so high ?

I think the role of middlemen can be reduced in Insurance area
as well. Let the person who is purchasing insurance do his/her
own paper work, medical tests etc. That can reduce the premium.