In the past I had done 3 articles calling the article ‘ranking trap’. These articles were written on 5th july, 20th july and 19th dec. Using past data to judge is height of “&^%$#*” – fraud or comedy depending on your point of view.
Mutual fund ranking is a fantastic money spinning game for most of the media. If a magazine ranks say ‘ABC’ as the best fund, immediately the fund house will ask for 15,000 copies (oh just the front page, the awards article and the back cover ad) and send it to all and sundry. They will then engage the national press to talk about how great they are. The biggest beneficiary is the MAGAZINE that creates the award – because magazines do not have as much ad budgets as an amc has.
So there is happiness all around. And the criteria can be made as stringent or as liberal. If you say – a fund in existence for at least 12 years, with an aum of x, has seen change of cio at least 4 times, ….starting with the letter L, – there can be only one winner, correct. And the jury cannot be blamed. Then you ask Price Waterhouse Coopers to audit the process (well they charge 4 times what the others charge, but what the hell!) and viola, the awards are ready. Then you tie up with a channel (as they say in Hindi if a peackock dances in the forest who will watch) …and vow!
However, suddenly Monika Halan resigns from Outlook Money and some people in the media take notice. However, a friend an ex-editor of 3 prestigious publications once told me (when he was doing a story on mutual funds and unit linked products cost structure) “Subra, I have mad up my mind, do not confuse me with the facts”.
I do not think this is the last you are hearing from me about mutual fund ranking trap…but if you want to know why the resignation, read here http://presstalk.blogspot.com/2009/01/whoa.html
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