Every mutual fund you go to will tell you the following:
- It is impossible to predict markets
- you should keep doing your sip
- in the long run the id-cap shares may or may not out-perform the large cap….and more such shit.
Largely they are guessing. They are hoping that you die before they leave the world!
So turn around and ask them the following:
- what is the age group of your investors?
- err…cluster, age etc?
- what are their goals for which they are investing ?
- what is their gender? (oops this they are capturing now)
- why did they choose this fund?
- what will the investors do if the market falls 30%?
- why are your clients doing their sip?
- well why did that client exit scheme A and enter a close ended fund IPO?
Hmm…they do not know. They will tell you “this is what the IFA is supposed to know..THAT is not our job”. Amazing shit.
The normal IFA (which means other than the top 35) does not capture this. He has no MIS on his client’s details. He will not have either the guts to ask or the software to capture these details.
So we have a funny situation where the person investing does not know why he is investing. (well he saw the SIP ad) or something like that.
The intermediary is indifferent to why he is investing as long as he is investing
The mutual fund house is busy totaling up the days collection, and telling its directors that they are just about to launch a long term equity product for 36 years…oops sorry months.
In its euphoria of AUM and the TER they just got a study done about the investment behavior of the client.
My logic is – “If you know NOTHING about him…at the micro level..how will you know what they will do as a community of advisers?
Will you be able to see the report and say “we thought our experience was unique…but many fund houses have had the same problem”
Mutual funds should first capture the mind of their retail investor….then they can see a pattern of how
- a foreign trip can swing aum
- did an investor really withdraw for his need?
- did an investor withdraw his ELSS after the 3 year period is over?
- did an investor withdraw in a downturn?
- did the ifa know that this big client was going to withdraw?
- did the client withdraw because he was expecting 22% return but got ONLY 16%?
Go Mutual fund industry go and capture this data. Then use analytics to see what happens. Then get a study done. Then get more interaction with the client.
then you are ready for business.
When a mutual fund wanted to “congratulate” its top 10 customers it found that the client had died, client had not told his family – and it was forgotten, and all these investors data was sketchy and incomplete!
Moral: mutual fund business is profitable because people invest for the long run, and they promptly forget (or in one case they thought it was some fly by night operator)…well it is profitable for the family AND THE FUND HOUSE TOO. That part of the aum will never go down!
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