mutual fund fleecing

Recently ICICI announced the launch of ICICI Prudential Real Estate Securities Fund. Its advertisement came with the picture of how the landscape of bangalore has transformed over the years, so naturally I became interested. However, the moment I started reading its offer documents, I realized that this fund has no intentions in owning and developing a property. All it will do is take your money and invest in a debt scheme/bonds.

Similarly, a couple of months ago a lot of global funds were launched which claimed to invest in international securities. I was keenly interested in them, because it would help me in hedging my risks, and reduce my portfolio’s dependence on the performance of BSE Sensex. However, yesterday, when I visited their website to check their portfolio, all I found that they were either sitting with huge stockpiles of cash or 90% of their portfolio consisted of either Indian stocks or ADRs of Indian stocks…. which totally contradicts their advertisements, or investment rationale.

Today there was an article in moneycontrol how all the index funds (irrespective of the fund house) have underperformed the index… Surprised!!!! well this is what happens when index funds does not invest in stocks which forms the index.

The point is that that please do not fall for the jazzy advertisements and facade…. go check the history of the fund and its current portfolio before giving them their money.

8 replies on “mutual fund fleecing”

//go check the history of the fund and its current portfolio before giving them their money.

Which is also incomplete most of the times and gives us a skewed estimation because there are no regulations governing the disclosure policy.

no as per SEBI, all the mf need to declare their NAV and their assets mixture by 8pm after end of the trading day. so getting the history is not very tough…

but unlike USAw where most funds work hard to reduce the AMC, most indian mutual funds charge 2.5% upwards plus the open ended funds charge an additional 1% for advertisements…. basically they charge as high as SEBI allows them to bill… and worse most indians do not even care about it.

Oh all right. Here, there is a big problem with Hedge funds and such. There are no mandatory disclosures.

We need to really consider the various entry, exit and other annual fees …plus, diff. funds will be valuable depending upon your time line. So, something might be more profitable for a period of 5 yrs investment; but some other fund might be valuable for a 10 yr investment period.

Most people who invest don’t even know the basics and think that everything is ‘safe’.

but again hedge funds are only for the super rich… i do not think commoners with 5 digit salaries park their funds there.

luckily hedge funds or quant funds are not in india 🙂 but who knows things might change soon

so did u chk out value research

from the times of uti funds are like that only
if the managers didnt think of personal gains through
helping out some mgmts
they thought of yearly bonus and other incentives

it is the market resiliance that has given gains
else the iim grads that most funds employ are just there for their for their bonuses
the problem is that most funds arnt accountable to their mf holders who can only track nav and dump the mf if it underperforms

Leave a Reply

Your email address will not be published. Required fields are marked *