Recently one Advisor (and his associated fund house) have been pushing me to invest in a fund of funds. I am a little scared about a super supervisor over looking my funds. However Quantum Long Term equity fund was being pushed to me – really hard to invest in that fund.
I decided to compare 3 funds – large cap biased for sure!
1. Hdfc Top 200 2. Hdfc Equity fund and 3. Quantum Long Term Equity fund
and it looked somewhat like this:
Fund Name 6 months 1 year 3 year
H top 200 54.04% 17.33 15.92
H equity 52.20% 13.01 11.67
Quantum 45.12 9.54 9.84
I was wondering whether this was just a mathematical accident or a deliberate reason why there was such a big difference. I realised that it could have been caused by 2 things:
Fund manager competence and Fund management expenses. Now fund manager competence is questionable because a fund manager can change jobs. So as an investor I could only concentrate on costs.
That was quite revealing: Top 200 amc costs were 1.89; Hdfc Equity was: 1.86 and Quantum was a whooping 2.49!! (the upper limit by SEBI is 2.50%). So I daresay based on competence and costs it will be difficult – almost impossible for Q to catch up with these 2 schemes – and I picked up only one fund house. I could have picked Prudential Icici, DSP, Templeton…and perhaps come to the same conclusion. Sorry for being the party pooper. I see no reason to pick a fund of funds from …..just anywhere. I would prefer a simple Index fund with 0.5% amc charges or stick to the old foggies.
By the way I also have a fund house presentation saying that the index will reach 21000 by July 2010. From 13000 index today (or thereabouts) it means you will get 64% return. Anybody who is so sure of their prediction should NOT BE IN THE BUSINESS of predicting. They should invest Rs. 1000 crores (with leverage @ 12% interest) earn Rs. 640 crores, pay Rs. 120 crores as interest and put Rs. 520 crores (hey it is tax free) in G secs and retire. Just like that. Simple ain’t it?
Post Footer automatically generated by Add Post Footer Plugin for wordpress.