Mutual Funds: We Don’t Know If We’ll Perform As Well In Future, But Give Us Your Money Anyway

From an ad by HDFC Mutual Fund:

How to choose a mutual fund.

Step 1. Check past performance
Step 2. Check past performance
Step 3. Check past performance

The ad then goes on to say,

Past performance may or may not be sustained in the future.

How’s that for a catch? It’s as good as saying “Handover your [hard earned] money and we’ll see what we can do with it. Whether you gain or not, we’ll get our cut, for sure, though.”

I’d like to see if fund houses trumpet their past performance during a sustained bear market. It’s certainly possible; just trumpet that you have delivered lower negative returns than whatever index your fund is being benchmarked against. Even then you’ll read that,

Past performance may or may not be sustained in the future.

Further reading:

1. Lame Financial Products: Would You Trust Your Money With These Funds?
2. Tweets on 2008-06-21
3. Lame Product: Lotus India Agile Fund — Another Great Opportunity To Play Diwali With Your Cash
4. How to Apply for a Mutual Fund Identification Number (MIN)?
5. Personal Finance Tip: How To Obtain “Know Your Client” (KYC) Compliance For Investing In Mutual Funds?

Tagged as: investments, mutual funds