MF Portfolio Games And Gains

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MFs investor base grow faster than AUM

: Two years ago, under the guise of wealth management, several firms, even the most reputed banks, offered their services. All you had to do was pledge a certain sum, usually above Rs 15 lakh, and you would have a dedicated relationship manager who would offer you advice - for free. While the going was good and as the markets shot up, the creed grew. After all, any bet would yield results. Now that the markets have corrected, many of these relationship managers are not to be seen around. “I am saddled with several funds that I am not aware off,” says Rakesh Jhamb, a senior executive in a multinational fund. And he is not alone.

There are several who fell to the guile of wealth managers (see page IX for more) who have advised people to buy into certain mutual fund schemes just because their commissions were high. The business model for free services meant that earnings were made from these commissions, which could be as high as 7% of the funds.

With the inflation numbers rising, tax is getting difficult to manage, and the stock markets being rather lack lustre, your returns could now be turning negative. Mutual fund investments, could actually act as a solace for your portfolio. Select diversified funds, arbitrage funds, and gold exchange traded funds have actually returned positive numbers.

Usual care

Clearly, there are questions to be asked about such lousy advisory services. But then the ‘caveat emptor’ or buyer beware factor always persists. And the age-old norm of ‘one size fits all’ does not work here.

You must be clear of your investment objectives before you commit funds, clichéd advice that is surely worth repeating. “I have seen 80% of my clients not asking me about the riskiness of funds they are buying into. Girega nahin na bhai (hope it will not fall) is what they seem to ask”, says Steven Colaco, an advisor and distributor. This is the level of apathy present amongst investors. And most of them are extremely well educated and hold high posts.