Your views in this blog are not based on accurate facts.

As per the blog, you say “what sells is what gets sold”. Tell me, in which industry do you find salesmen trying to sell what is actually good. Even in case of an FMCG salesman, he will sell more of Lux as compared to Dove because it is easier to sell!!!

NFOs sell not because of the sales efforts. They sell because of the mentality the a Rs. 10 NFO is cheaper than Rs. 50 NAV. Something that advisors need to work on. If they at least advise investors, and not act as courier boys peddling forms, the practice will automatically stop.

Also, in defence of Portfolio construction by Mutual Fund Managers, let me put it this way – do investors understand the difference in a focussed portfolio and a diversified one. Everyone who invested in the tech bubble “IT funds” were heard cursing the funds throughout the period of 2003-07, saying other funds bounced back but theirs did not. Did any investor try to understand the investment pattern or read the offer document before writing the cheque or signing the form? All that they wanted is a quick buck.

Please let us understand, that most of us who call ourselves investors are nothing but speculators expecting the investing community to time the market better than us. If you read the book ‘The Intelligent Investor’ by Benjamin Graham, you’ll know what I am talking about.

With the kind of competition in the investment industry, even good fund managers are forced to churn their portfolios against their wishes as the ‘investors’ would not want to see the same stuff in their portfolios. They want something “new”, some thing “different”, some different “story”, which drives sales teams to come up with new sales ideas.

Also the mention about finding the same portfolios in different types of funds is justifiable. GE, the world’s largest company was a value play, a growth oriented stock, a dividend yield stock and a defensive bet – all at the same time!!! If a company like GE can be in all the baskets, Indian companies would pale in comparison. India is a high growth ecenomy and I am sure that any company that grows faster than the real GDP of any country can be classified as a growth stock. Lets take HUL for example – Dividend Yield is fantastic, the best defensive play that you can get, growing faster than the economy and at the same if one reads the balance sheets, it is a wonderful value play!!!

I agree that so many different funds may not be required and probably the fund managers need to stick to their mandate more strictly than they do. However, in the cat kills cat scenarios where your performance over 10 year periods are of little relevance as compared to the last 1 month return, I do not blame these poor guys.

Give tham a chance…

Cheers