When you get up in the morning you have only one brush and paste to choose from (presumably). However when you have to wear a dress and if you have 300 shirts and 100 pants, I wonder what you do.

I have 5 black pants and maybe 10 white shirts – I seriously do not have to wonder what to wear.

A grocery store has 140 varieties of biscuits, 22 varieties of tea, toothpaste…..WHAT DO YOU ACTUALLY DO? There is enough research (which the marketing people do not know) that increasing choice, does not help. Does not help at all.

Come to the world of Mutual funds. Imagine there are 5000 fund schemes. Let us say you have decided to invest in a mutual fund and meet a MFD (Mutual fund distributor) and the conversation would go like this:

C: Sir, I would like to invest in a mutual fund.

MfD: thats awesome sir, tell me which form should I give you.

C: Mutual fund, of course!!

M: No no sir, I meant in which fund SCHEME do you wish to invest

C: SIP of course, everybody knows that!!

M: sir SIP is a method you need to tell me which fund house and which scheme.

C: What would you do if you were me?

M: ha ha sir, but I am not you!

exasperated Client: dammit gimme a form.

M: Sir let me make it easier for you Debt fund or equity fund?

C: Equity returns are giving good returns, so equity.

M: ha sir out of 5000 schemes you have eliminated 4500!

C: now what…do I need to fill up 500 forms?

M: No sir, now it becomes simpler

C: So gimme the form!

M: sir you need to decide large cap, mid cap, multi cap, equity oriented MIP, equity oriented balanced fund, ….

C: OMG is this never ending!

M: Sir actually you should be asking your RIA about where this is to be invested I am only a MFD

C: I will invest in large cap

M: sir how did you decide that?

C: it was the first choice you offered, normally that is the best.

M: Good sir – in a growth oriented fund or a contrarian fund?

C: can I not choose both?

M: Ok sir, I will give you 2 forms…

C: give me the best mutual fund form

M: Sir past performance or future performance?

C: Past performance of course

M: Sir past 1 year, 5 year, 3year or 7year?

C: What do you think?

M: sir I cannot decide I am only a form giver – I told you earlier

C: Just give me any F….. form!!!

Sir I can tell you one thing. Best is to invest in an index fund.

C: Why

Because sir there are 450 funds for you to choose. Technically you can choose any one. If your fund is the best performer for the next 1 year, 3 year, 5 year, 7 year and 22 years great. However if you see it after 5 months and find that it is not the best, YOU will feel rotten.

You will feel rotten that YOU choose the wrong fund. Not me. I am just a form giver as I told you. You will then feel miserable that THE FUND THAT YOU CHOOSE did not do well.

If you choose an index fund, you need not feel bad. You have got market returns. If market returns are not good you can blame me, your RIA, NaMo, Trump, the exchange rate, the IT industry – anybody EXCEPT yourself. Imagine how stressful it would be if YOU ARE GUILTY of choosing the wrong fund. In the index fund YOU ARE NOT AT FAULT.

C: will the Index fund be at the top?

MFD: that is the beauty of the index fund sir. It can NEVER be at the top, BUT it can NEVER be at the bottom either. It will never make you look bad. In any party you can say I am in the middle. Just like you sir. Never at the top, but never at the bottom.


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