Direct Equity or Mutual fund or PMS or ULIP?

I have not been able to answer this question for myself – forget answering this question for others. There are 2 big company CEOs who constantly have their portfolios reviewed by me – the equity portion of it. One of them is in financial services.

There are 3 fund managers who talk to me at least 6-7 times a quarter about the markets. Then there must be a dozen brokers who chat up about their investments.

Largely it is to get an unbiased view about what is happening – and this after I have semi-retired. What one super HNI told me was interesting. He said “There are 20 competent Hedge fund managers in the world and there are 1000 funds. In Indian conditions too, there are 10 good fund managers but we have 42 mutual funds”. Damning, but knowing this guy, should be true.

Feels scary to tell people – go only to mutual funds. Feels scary to send people just to index funds. ULIPs are not an insurance vehicle at all – the upfront charges and not being able to come out half way are HORRIBLE constraints. PMS horror stories are unprintable. What should the retail investor like you and me do? Mirror the index? One friend has a solution – completely American though of starting a paid website (annual charges Rs. 100,000) for allowing you to track some brilliant souls who invest in the market. Not a high cost website development – but putting the risk document in place is really a nightmare, but I think it will fly.

What is my gain? He thinks I should provide equity content. LOL. Not a bad deal?

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3 Responses to “Direct Equity or Mutual fund or PMS or ULIP?”

  1. apart from open source software, nothing fruitful is free 🙂

  2. Well, this is what Dhirendra Kumar of Valueresearchonline says. Chose four to five good funds and invest through SIP. Monitor the performance regularly – yearly? – and change if performance deterioriates for a longer amount of time – three or five years ?.

    Ok, this is what I do. I invest in stocks, if the risk-reward is to my favour. I have not invested much in the last 6 months. I did invest from Aug 2008 till around May 2010. I am doing decently in my own stock portfolio. I dont intend to add much with the market conditions today , although I am not selling much also.

    I have continued to invest in SIPs right from good old days. As my income increased, I increased the quota of SIP has increased on a monthly basis. Initially I did chose some wrong funds and I have taken corrective actions. The SIPs continue and will continue.

    I think, for individual investors , who dont go thru brokers, investing directly in markets, is a dangerous game. Unless, the risk-reward favours you. I have lost a ton of my wealth – though its not a loss-loss on net-net basis – through Satyam stock. Never use and used margin money. I am not a trader.

    As to what is risk-reward exactly is, is a million dollar question. Each one should have own idea of the same. Markets will teach you, whether its right or wrong.

  3. I cannot thank you enough for the blog.Thanks
    Again. Much obliged.

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