What is right about Mutual Funds?
Mutual Fund is a science of investing the money in the right proportion in the right asset class at the right time to get the right return in the right possible holding period.
The misconception and the lack of understanding have created many toxins in the mind of investors preventing them from gaining adequately from mutual fund investment.
20 Toxins to get rid off – T20 syndrome
- New Fund offer makes a better choice than existing Fund
- They are privately managed and can go wrong for lack of transparency
- Funds do not share returns fully as they skim profits
- Manage large funds that can become too big to handle
- Good for dividends only and not for capital appreciation
- Just another vehicle to park investments out of compulsion
- Cost of the Mutual funds are very high and are subject to many invisible costs
- Stocks are better options than mutual funds by risk and control
- Mutual funds can make the investment into any category and can escape explanation
- Witness high turnover and hence more volatile
- It is all about equity and they can take undue risk in the portfolio
- Fund Managers manage the money in their own style and don’t bother too much
- High on promises and low on performance
- Best only when they guarantee returns
- MF is only for those who are an expert in stocks
- The fund is not answerable to anyone
- They are fair-weather friends. When the going is good they are good
- Appoint anybody as Fund Manager and they lack experience
- Redemption of units is not easy as funds are locked for sometime
- I hardly get to know the fund’s performance and measure it
An Optical Illusion
Investors need to be detoxified before they get to invest so that they can know what they get when they invest in a particular mutual fund. This will prevent undue expectations and optical illusion when it comes to investing
Happy Investing