Here are some of the confessions of a very successful IFA. Exactly why it merits being mentioned :

1. I play favorites with some fund houses: It has taken me a very long time to establish relationships with about 5 mutual fund houses. I recommend only their products. Sure there are about 40 other fund houses and 4000 schemes!! However since I have only about 100 families to cater to, I find that I do not need more than about 20 schemes from 5 fund houses. I stick to them. These are nice big houses and I guess between the 5 houses, they control more than 90% of the market share. Sorry, but the other fund houses do not matter at all – to me and to my customers.

2. Of course I keep looking at the fund performance – relative to the benchmark and in absolute terms BUT NOT IN COMPARISON to other funds in the same category. To me once I have chosen a fund manager it does not matter if he misses one or two quarters. I do not mind if he sells off FMCG and invests in Infra a quarter or two early. If it is a sensible thing to do and if he has done it, I am fine with the process. I am interested in the process more than the result. A couple of wrong results are fine to handle.

3. To me purity of style is very important! If a fund says ‘Blue Chip’ in its name and behavior I DO NOT EXPECT TO SEE START UPS in that portfolio. This mixing gets my goat and hence I do not track one very big fund house. This group had no concept of a large cap fund and a small cap fund. I got all my clients to exit even when the fund was doing well. I have no stake at all in that group.

4. More than the fund, I look at the investor. If the investor keeps looking at the fund and comparing it to the index / benchmark on a monthly / Quarterly basis, I would put his money in Franklin India Bluechip fund. However if he is a client who does not look at it very regularly I would put his money in IPru Value Discovery fund – a fund that can give lumpy performance. I expect both funds to perform in a similar manner and I do not worry too much about market capitalization orientation of the fund. Of course when I am creating a balanced portfolio I make sure both these funds are there !!

5. Unless the client’s equity portfolio exceeds about US $ 1 million I do not insist on currency and market diversification. For smaller portfolios I ensure that the client does a small SIP in funds with international exposure.

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  1. thanks Subra. all are indicative points to noted fund houses. Guess I read them correctly 🙂

    your posts on great mr. palkhiwala is awaited
    please put some time on this great man too

  2. 6. I in my IFA title is supposed to be independent. Of course I am financially dependent on my clients for my BMW
    7. Nobody can sue me for bad advice

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