Fashion enthusiast | Posted on | Share-Market-Finance
What are the secrets of Mutual Fund industry which are not known to a layperson?
Project Manager at The Economic Times | Posted on
Mutual Funds are by far one of the safest option of investments for people who cannot manage their money or keep a track of market movement. The government in India has set up a regulatory body called Securities and Exchange Board of India (SEBI) which is represented by Association of Mutual Funds in India (AMFI).
People who manage Mutual Fund on our behalf are known as Asset Management Companies (AMC). Technically there are no hidden truth about these companies but there are a couple of things which a common man might not know. Here’s the list:
- Not all fund work for all the companies, there are good ones and bad ones but overall health of AMC balances the overall portfolio.
- They will never let you know the bad phases. Like during 2008 crisis. Nearly all funds performed on lower side. While calculating returns, companies on most cases would ignore that period to give you a good picture. This happens in most cases. The calculation of returns are usually skewed.
- Almost all mutual fund schemes would give you same returns as fund managers are not brave enough to take risk. Hence they follow each other to stay safe.
- Mutual Fund managers are not owners, most of them are employees, who are supposed to take decision as per their master’s discretion.
- You earn because you keep invested in schemes for long run, not because somebody is working hard to make you rich
- Except a few, almost all Mutual Fund schemes earn a marginal return
A recommendation from me: Be the master of your money, never let anybody else take decision on your behalf.
2
0
0