A few days ago I did a post profiling some of my readers. Let me tell you some more things. I have no clue how much of that money was made in a fair manner. I mean was it made with inside information? Was it front running?

I do not have an answer, but yes most of it was made in the equity markets. Most of them realized that RE can be good for one or 2 houses or offices but long term wealth creation is multi decade and multi generational.

Given this background I was pained at the Mint Mutual Fund conclave when in the CIO panel discussion there were some CIOs who were arguing for a 2-3 year close ended fund with dividend payouts. I fully agree with Prashant who said that there can be a marketing justification for such a scheme, not a fund management justification.

I am also worried about investing in other schemes of such fund houses. Matching of minds with the CIO is very useful if you want to sleep at peace.

PJ also said that there is just not enough evidence that close ended funds or smaller fund. Given our market capitalization our funds are too small. So if you are a large cap player being in a fund with say Rs. 10,000 crores should not worry you. At least you do not run the liquidity risk…

Santosh Kamath also said some very sensible things. If you misuse or overuse a privilege one day it will be taken away. You cannot create a quirk of a product like ‘Arbitrage fund’ – which has equity but OBVIOUSLY performs like a debt fund. Surely this fund will be taxed like a debt fund – and you should be damn lucky if it does not happen with retrospective effect. I think fund houses should stop playing around with the nice provisions of the law.

 

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