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A report by ValueQuest Investment Advisors shows that Indian mutual funds are priced at over 2X the price of mutual funds in the US.
While the corporate valuations of mutual funds in the US based on 1 year forward P/E stand at 15X, the valuations of Indian mutual funds are at 35-45X. The report adds that the high valuations of Indian mutual funds are justified looking at the large growth potential of the Indian markets.
Similarly, Indian exchanges also have a higher valuation than US exchanges. While US exchanges are valued at 25X in the report, Indian exchanges have a valuation of 25-50X.
When it comes to wealth managers, US wealth managers are valued at 20X while Indian wealth managers are valued at 25-30X. The report called the valuation of wealth managers as the most reasonable among the three.
It cited their expected growth profile, return on equity and recurring nature of business for some players as the reasons to arrive at this conclusion.
