There are many people who write in to say ‘I do not like mutual funds’. Fantastic. What is your choice?
Out of about 4000 investors / traders whom I have met over the years not more than 50 are/were capable of beating the index regularly over long periods of time. The statistics is against you dude, go get a good fund scheme and do a SIP.
People do not like the fact that mutual funds charge too much for managing your money. True, they do charge anywhere between 150 basis points to 250 basis points….is that too much?
Well the NPS – the nano of the fund industry charges much lesser at .0009. However let me repeat this for the Nth time. Costs are not everything. Fund schemes like Hdfc Top 200, Kotak K 30, Icici Pru Discovery, I Pru taxplan, Hdfc Equity fund, Hdfc Prudence, Franklin India Bluechip, Franklin India Flexicap, Templeton India Growth Fund, – there is a whole list there which charges much, much higher than a NPS fund. And in spite of the fact that the charges ehre are higher, my returns would be higher than an NPS scheme, INSPITE OF THE COSTS.
So even though we all know costs are important, competence of the fund manager, and his integrity are far more important than costs.
Take a real life example! Do you remember a dentist who over charged you or a dentist who damaged your teeth? Somewhat similarly I refuse to buy the theory of costs. Yes costs are important and relevant AFTER i have made up my mind about which INDEX FUND to invest. Then I would be looking towards the cheapest fund with the least tracking error….but that is not a concept of an active management fund.
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