The business of mutual funds

HDFC Asset Management Company, which runs HDFC Mutual Fund, has just had an extremely successful stock listing. On the first day after listing, the stock closed up 65 per cent. While the promoter, HDFC, must be wondering whether it had underpriced the issue and thus left money lying on the table, the price appreciation does indicates an impressive demand for the stock. While I hold no strong view on whether this particular stock is a good investment or not from here onwards, I've observed over the last few days that a lot of casual equity investors do not appreciate the unique business model that mutual fund companies have. Coincidentally, just the day that HDFC AMC listed, I came across an (unrelated) tweet by the American financial commentator