Wealthcare Investments

Kya Mutual fund sahi hai?

Mutual Fund sahi nahi hai

Mutual fund sahi hai aur Investor shahid hai

I usually do not write ill about any other product but I am seeing attacks on the Mutual funds since the Franklin Templeton winding up of schemes. Suddenly the competition industry - Insurance (especially Zindagi ke baad wale) and Real Estate guys are trolling the Mutual Funds.

Social media flooded with Anti mutual fund campaign!! And surprisingly, even the informed and educated investors got either confused or convinced by these messages.

I thought to write today as since I am firm believer of Mutual fund as method of investing across the asset classes viz Equity, Debt, Gold and Property ( Yes Mutual funds have products with Gold and Real estate investments also). As a responsible player in the industry, it’s my duty to demystify some of the messages and hype around it and help educate the investor community at large. No offense meant to any industry, product or investor

I believe all products have to be part of the asset allocation of the Investor’s basket. What I have seen is Equity is the most under-invested asset class among 80 - 90% of Indians. Therefore I endeavour to drive equity cult among Indian investors. But I also behave responsibly when the valuations are not conducive. Since over 2yrs, I also mentioned that gold is likely to do well. My view on real estate was negative since long which also got vindicated. Our existing investors can vouch for my claims.

Let me share the basics of mutual fund today. It could be new for many and brush up for many!!

Mutual funds stands for

1) Simple

2) Transparent

3) Professionally managed

4) Tax efficient

5) Offers diversification

6) Can give better risk adjusted returns v/s benchmark

7) Offers liquidity

8) Highly regulated

9) Easy to manage and maintain

10) Track record of 25 years in India. Most preferred investment vehicle for Investors across the world

Whatever negative you have come across in past one month about the mutual funds, I would like you to evaluate the Mutual funds in light of below mentioned pertinent points.

1)      Transparency issue – No one can deny the fact that Mutual fund are tightly regulated (may be over regulated). Can anyone give example of full proof product/service or industry which has no grey area? In the Investment world, is there a product which is so transparent? Disclosure of portfolio, Valuation, Expenses, many disclosures and undertaking which investors are not even aware of!!

2)      Quite risky – Again can anyone tell me which investment doesn’t have risk involved? FDs, Property and Gold has no risk? Kindly also note that besides risk of return and or capital, risk are of different types. Example – Risk of capital not beating inflation in FDs, risk of title, ownership, litigation, encroachment in real estate/land etc. Risk of purity and genuineness in gold etc. 1)      In fact Mutual fund carries the disclaimer (which no one carries) "Mutual fund Investments are subject to market risk"

3)      Liquidity and or permanent loss – With winding up of 6 schemes (among thousands of mutual fund schemes) of Franklin Templeton, entire mutual fund industry cant be painted with the same brush!! This is one of event in the history of Mutual fund existence barring few schemes during subprime crisis!! Please consider, world is going thru a unique situation of lockdown thru out for nearly 2 months. Never in history, whole world was in lockdown and that too at the same time. You will see your buyer may not be paying you, your employees may not be paid, your salary may not be paid, you may lose your job. Many businesses will go bankrupt in times to come. In this context if part of your investments is locked in, is it really all that bad?? Not disregarding the anxiety and pain of investors. The endeavour is to give logical guidance.

4)      Less than FD returns in last 5 yrs – Since last 5 yrs, preserving asset (Debt and Gold) gave better returns and growth asset (Equity and Property) gave less return in comparison. Investor usually follows herd mentality and invests in product which has given great returns in past. Wise investors does SWOT analysis and look for opportunities. I would urge you to think, if equity has given lower returns for long period of time, what is the outlook of future? Equity is ownership in business! If you think business don’t bounce back or create wealth, than you will not agree with me. Couple it with fact that, world thinking of revival of growth at any cost, would mean what to equities?? Equity will revert to mean therefore, equity should deliver better returns, sooner than later. Vichaar kare.

5)      Agent, Wealth Managers, Bankers are mis-selling – Each and every industry will have element of mis-selling and/or have incapable operators. Some institution/outfits/agents will not put Investors interest before theirs. Some players are not contacting Investors or not taking their calls. Some players are not experienced/capable enough to gauge market trends etc. Bluntly speaking, Investors will have to do that hard work to find out experienced and trust worthy person who can manage Investments better. That’s the least investors can do to safeguard own interest.

Mutual funds have been giving benchmark beating returns since decades and will do it future also. World over, Mutual funds has proved to be preferred investment vehicle for HNIs, Middle class and retail investors.

In case you need to know more? Please feel free to speak to me on 9833778887 or write to me at wealthcarein@gmail.com. I will be happy to help you without obligation.

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Author –

Bhavesh D Damania

Founder & Chief Care Taker - Wealthcare Investments

EduPrenuer, TV show panellist and Blogger

You can reach him at 9833778887 and wealthcarein@gmail.com

"Risk comes until you know what, where and why you are Investing”