Heads I win, Tails you lose theory of Mutual Funds

"..India's top asset management companies (AMCs) have continued to remain profitable, nomatter whether mutual fund investors made money or not in the tough market conditions. Rather, top players have posted growth in their profitability during financial year 2011-12..." 

I was suspecting this all along and exactly the reason why I hardly ever invest in mutual funds.  To those who solicited my custom (especially the executives at ICICI and HDFC Mutual Funds whom I had to sadly turn down each time they cold call me) I pop the question "will you charge me even if  my portfolio created by you wilts under water...?"  Their reply has always been in the affirmative and that was something that I could never digest. This spurred me on to quit my job and start my own investment management business  with a spunky slogan "...We wouldn't charge you unless we help make enough for yourself..."   I can proudly claim that I'd been keeping up that promise.

All my clients will swear by that, something that helps me effortlessly wean away clients that got creamed by portfolio managers and mutual funds and sincerely hope they keep going down that one way street so that my business is in tact, ethically miles ahead of them...!!!

Performance by default

Sunil Jain in BS –

“Though the country’s tax collections are rising by leaps and bounds, a recent paper in the Economic & Political Weekly suggests this may have more to do with the growth in the economy than with the efficiency of tax administration.”

He quotes some statistics to buttress his pov.

I can’t agree more. I would even draw a parallel. Haven’t you noticed the same thing with performance of our fund managers in Mutual Funds? Don’t they do the same thing? When markets are near their peaks, all of them brag their chests. NAVs of their various funds are high by default than by design – reducing them to just being punters. But then that’s what you and I do. Why pay commissions and entry/exit loads to these pumpkins?

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