AMC market value should be larger than Banks or NBFC – MoneyDhan

Reading Time: 2 minutes


Great PMS manager Shankar Sharma once enlightened us, in an interview.

An Asset Management Company has zero risk. It transfers all it’s risk to the investors. Think of Franklin Debt fund winding up.

A bank bears the risk of Default by the company or individual who borrows. Bank must repay it’s depositors. Yes Bank paid it’s fixed depositors.

Thus Shankar sir advocates valuation of AMC companies should be 10-20 times Higher than those of Banks of NBFCs

All an AMC has to do is keep increasing it’s Asset Under Management and earn Risk free fee (expense Ratio)
That’s a good business for an Share holder.

I want to echo his thought. His point of view made sense to me.

Then I questioned myself. There are 4 people in the room
✓shareholder
✓AMC
✓The fund Manager working for AMC
✓The Investor.

An deal happens only if, at least one person in the group is an idiot.

When you are In a group of people making a deal. If you can’t find that idiot. Then it’s probably ‘you’.

Out of 4 parties, I am sure top 3 are not idiots. They have there ground covered very well.

Also Read on FinMedium:  HDFC AMC vs NIPPON AMC - Stock Comparison

linkedin Post



Source link

Disclaimer: The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the FinMedium or its members. The presentation of material therein does not imply the expression of any opinion whatsoever on the part of the FinMedium concerning the legal status of any company, country, area, or territory or of its authorities. For more info. please read our ToU & Privacy Policy here. If you have any concerns regarding this post, please reach out to us at finmedium@gmail.com

Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!


Money Dhan

Money Dhan

Sujith comes with 15 years of experience in the derivatives market along with Long term Wealth creation via Large-cap companies. His theory is: If risk-free Bank FD generates 100% in X years, the Stock market should provide that return in half the time.
Please Share Now :)