If you are an investor how many fund schemes do you need to know / track / understand?
Well if you are like me 3 a maximum of 5.
However if you are a person who thinks that all problems in life can be solved by mutual funds, maybe 10.
Normally people save for
a) short term goals b) long term goals and c) emergency cash. I am making an assumption which is simplistic – so that I can write this article. Real life of course is far more complicated.
If you work for a media company, how many funds do you need to track?
Well difficult to say, but say 4000 fund schemes simply because they all advertise!
So what do you do when a Gold Fund no. 44 is launched? or when a MidCap fund no. 23 is launched?
You say, “If you do not have a gold fund in your portfolio, it is a good idea to INVEST in a gold fund” or to say ‘A good portfolio should have some money in a large cap fund a mid cap fund a bond fund and a gold fund’.
It is really difficult to thrash a new NFO of say a gold fund. After all you really have nothing AGAINST it, right? Also like in any product the ad spend that a company does at the launch is the highest.
Later on however you may have to say – among the gold funds, xyz is the best, it has the lowest charges…………etc.
An investor or a blogger who are not under advertising pressure can say – ‘Just look at the 3 fund houses – invest in xyz liquid / income fund for a 2-3 month view, invest in a balanced fund like Hdfc prudence or Hdfc balanced fund for a 2-5 year view, Hdfc Equity fund, Hdfc Top 200 fund, Franklin India blue chip fund – etc. et al for a 5-6 year + time horizon.
I can also say…’this fund is creating unnecessary noise’ – simply because the advertising is misleading. Not sure whether a magazine / website / tv channel can ever say that.
There are so many asset management companies which will not pass muster as a fund house itself. So for me, schemes from that company DO NOT MATTER. This is simply because as a Top Down selector of fund schemes, I first choose the fund house, then the manager and therefore the theme. However if I were driven by the ads…I cannot say that right? For example if I hear that a fund house has sacked 40% of its sales force – how can I be sure that the so called ‘fantastic fund manager’ is not worried about his job?
All this brings me down to a very, very narrow range….but what to do?
Politeness of the media has been pretty expensive for the end user….but he is not really bothered is he?
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