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Title: A Structural Equation Modeling Approach for Evolving New Business Model for next Generation Mutual Fund Industry
Authors: S. Prakash ; C. Sundar
Aff: SRM University Sr. Test Engineer, Franklin Templeton International Services (I) Pvt. Limited, India
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Keywords: Mutual Fund; Business Model; AMFI; Asset Management Company; Distribution Models
Abstract:Mutual funds as an investment vehicle have gained immense popularity in the current scenario. The existing mutual fund business models faces a number of issues which are characterized by lack of investor awareness, high dependence on corporate sector, low penetration levels and spiraling cost of operations. The study explores the critical factors that influence to restructure the Mutual Funds business models to provide for increased efficiencies and investor satisfaction. This paper focuses on the key growth drivers for the industry, identifying in the process the factors which may also reflect growth in the future. A new business model called INSIGHT is proposed for the sustainability of Indian mutual fund industry by considering aspects such as entry load, regulation of distributors, management fees paid to asset management companies, and taxation of mutual funds from the investor’s point of view. Exploratory factor analysis, confirmatory factor analysis and structural equation modeling were used to analyze the data. The results suggest that the proposed model is central to meeting customer needs while streamlining the business processes. The proposed model fits for both development and sustainability of Indian mutual fund industry in coming years.