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How would you name a mutual fund that:
Emerging Bluechip Fund???
I’m quite sure many will be misled into investing simply by the usage of the term “Bluechip.”
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Anoop asks:
What is the difference between an Ordinary Mutual Fund and HDFC’s Top 200 Mutual Fund?
I’ll answer a slightly different question — Why I chose the HDFC Top 200 Fund for my portfolio as opposed to another Mutual Fund?
My reasons:
Over to you.
What do you look for when picking up a mutual fund investment?
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Look at investments without knowing their price — because if you see the price, it automatically has some influence on you.
Source: amzn.to/p8QTZ
I did exactly that when I recently constructed my mutual funds portfolio — an SIP in HDFC’s Top 200 Fund to begin with.
By the way, if you’re invested in the same fund, what’s your opinion on it?
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N asks:
I want to save for my kid’s (an year and a half old at the moment) higher education — about fifteen years away. I can set aside Rs 10,000 each month. Where should I save or invest?
Here’s the investment strategy that I recommended:
Assuming an 8% rate of return for both investments, you’d have a corpus of nearly 34 lacs at the end of fifteen years — sufficient enough to fund a decent higher education.
And, as I’ve written before, it’s prudent to think about the cash outflow of a financial instrument before you invest in it. For the options that I have recommended, it’s easy to stop/resume contributing depending upon your financial situation — you can even stop one and continue the other.
What do you think? Would you advise a different strategy?
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ET reports:
Hit hard by the mass exodus of investors, amounting to an average of over one lac a month, the mutual fund houses are knocking on the doors of SEBI, which in turn is mulling over possible remedial actions including an expanded distribution model for these investment products. Over four lac investors are estimated to have closed their mutual fund accounts, as determined by the change in the number of mutual fund folios in the past three months, largely driven by redemption in equity-focused mutual fund schemes.
Is this a sign of investor education — where they’re unloading all those dud schemes with fancy names and fancier investment methodologies?
What do you think?
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Mutual funds are a grossly mis-sold, mis-positioned, and mis-communicated financial product in India — Dipen Seth, Money Today, June 25, 2009.
Add misunderstood to that list. Add Unit Linked Insurance Plans (ULIPs) to that list.
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It’s a pretty straightforward process:
That’s it. You’re all set to invest in Mutual Funds. I completed this procedure today in about an hour’s time.
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I hate Mutual Fund ads that harp on completely useless facts and then expect you to invest in them. The latest issue of Outlook Money carries an ad from Sundaram BNP Paribas who tout:
Blah blah blah…
Over a 28-year period, if you missed just the 10 best market days, the number of times your investment multiplied would be down from 137 to 53. If you missed the 40 best days, your investment would have multiplied just 8 times over 28 years!
An investment of Rs 75,000 would have made you a crorepathi now, if you had stayed continuously invested. If you had missed the best 40 days, your Rs 75,000 would now be worth just Rs 6 lac!
Blah blah blah…
WTF mate? Of what use are these nonsensical facts? Or are they meant to be psychologically seductive? Just for the record, 28 years ago, I was only a couple of months old. Maybe I should have somehow signaled to my parents to loan me Rs 75,000.
And lest you forget, past performance may or may not be sustained in the future.
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Reliance Mutual Fund has announced changes in the features of Reliance Index Fund (Nifty Plan and Sensex Plan) w.e.f. April 18, 2008. As per the proposed changes, the existing Reliance Index Fund’s name will be changed to Reliance Quant Plus Fund.
Source: Moneycontrol.
A classic “WTF mate?” situation. But this was to be expected sooner or later because, an Index Fund with astronomical expense ratios is guaranteed to consistently under perform the benchmark index and is absolutely guaranteed to make the fund house/fund manager rich and the poor investor poor. A Quant Fund with astronomical expense ratios, however, is guaranteed to make its investors destitute.
However, every dark cloud has a silver lining and there’s one here too.
All existing unit holders in the respective plans have the option to exit the fund at the prevailing Net Asset Value (NAV) without any exit load for a period of 30 days from March 18, 2008 to April 17, 2008. Unit holders who do not exercise the exit option by April 17, 2008 would be deemed to have consented to the proposed change.
Source: Moneycontrol.
If you’ve invested in Reliance Index Fund, my sincere advise is to cash out while you can. Next time around, look for a fund house with a better track record.
The fund house (Reliance Capital Asset Management) says,
We have our in-house model, which looks at various factors like valuation, earnings sentiments, price, momentum and shareholder’s value. Also, we would prefer to keep our portfolio’s sector weightage in line with the Nifty’s sector weight (in exceptional case, 20 per cent higher or lower). The investments in the portfolio will not necessary be equally weighted. The fund will be more of an active fund management approach than passive fund management and the rebalance will happen every week.
Source: Business Standard.
Translated into simple English it reads,
We’re clueless.
Related:
To learn how dangerous Quant Funds can be, read Lame Product: Lotus India Agile Fund — Another Great Opportunity To Play Diwali With Your Cash.
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It pays to conduct due diligence before you dump your hard-earned money into any of the harebrained NFOs (New Fund Offers) from Mutual Fund houses in India.
For example,
ICICI Prudential Real Estate Securities Fund
The fund manager says that this is the first of a kind offering in India and with back of the envelope calculations he tells us that the fund will deliver around 13% year on year, if the stock market rises around 20% per year.
If relying on someone’s back of the envelope calculations is how you define your investment strategy, this fund’s for you. I wouldn’t touch this fund with a pole. And I absolutely hate lame portfolio theories.
ING Global Real Estate Fund
The fund manager also explained that since it invests in REITs (Real Estate Investment Trusts) and stocks in the commercial space, the fund does not have any exposure to the US sub-prime housing sector. However, as the fund manager himself confesses, if the sub-prime crisis and the global economic slowdown brings down commercial real estate rents, the performance of the fund will suffer.
The fund manager doesn’t trust his investment philosophy himself. Why the hell should you?
Classic “WTF mate?” products. Let me know if you still want to dump your money into these funds. I’d love to listen to your logic.download house mp3|Download Celine Dion MP3|Download Spice Girls
I am not managing the fund, the model is. There is no fund manger required for a fund like this.
You’d be handing your cash over to a mathematical model running on a computer if you decide to invest in Lotus India’s Agile Fund — a quant fund currently doing its NFO (new fund offer).
So how much confidence can you place on the [secret] mathematical model to act in your best (i.e. profit making) interests?
We have back tested this fund down to 11.5 years and this has performed extremely well in a bear market as well as in bull markets.
Pretty confident eh? But dig around a bit and you’ll discover that:
The model used by the fund relies extensively on past data which may not necessarily be the best indicator of the future.
Still confident?
Finally, what does AGILE stand for? Alpha Generated from Industry Leaders Fund, where Alpha is a measure of the fund’s performance as against its benchmark index (which is the S&P CNX Nifty Index) and Industry Leaders is a diplomatic term for being vague.
This fund will redefine the product suite available in the market and will provide investors a model-based alternative to the existing value- and growth-based investing philosophies. Based on the extensive back-testing done, we believe that this offers an attractive additional asset allocation opportunity to equity mutual fund investors.
If you believe that financial jargon, this quant fund’s a great way to play Diwali, literally, with your hard earned cash.
Source(s):
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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.
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Getting your PAN was a headache. Now you need to get a MIN too. It’s time to bring out the Aspirin bottle. Why can’t we make it simple on ourselves and use our PAN as our MIN (or whatever!). While the policy makers slug it out, if you badly need your MIN, here’s how you get it.
{ From a Fidelity India FAQ }
What is a MIN?
MIN is a Mutual Fund Identification Number. This is issued to an investor after obtaining necessary documents like Photograph, Proof-of-Identity, Proof-of-Address, documents pertaining to registration, etc.
Since an investor generally invests with more than one Mutual Fund, it was felt by the Mutual Fund industry that the whole Know Your Customer (KYC) process could be carried out at a single window and by issuing a single number. The Mutual Fund Industry has appointed CDSL Ventures Limited (CVL), a subsidiary of Central Depository Services (India) Limited (CDSL), to issue MINs to investors. CVL has designated various Points-of-Service (PoS) for the purpose of receiving applications and issuing MINs.
This will make it easier for the investor as they do not have to undergo a KYC process with each individual Mutual Fund. It also means that the industry can offer many more PoS where an investor can get a MIN.
Where and how do I obtain a MIN?
The Mutual Fund Industry has appointed CDSL Ventures Limited (CVL), a subsidiary of Central Depository Services (India) Limited, to issue MINs. For this purpose, CVL has appointed some Scheduled Commercial Banks to function as Points of Service (PoS). A list of the PoS is available on AMFI’s website. Additionally, Investor Service Centres (ISCs) of some Mutual Funds would also be designated as PoS and will be available for accepting MIN Applications. Please log on to the website of the Mutual Fund with who you are looking to invest.
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