When it comes to investing I always say that Equities have out-performed other investment asset classes over the long-term in India as well as globally. With growing maturity, retail Investors in India have begun to realize this and also take into stride the short-term volatility of this asset class. Better regulatory environment and improved corporate governance have also helped bring more investors to Equities.
Equity investing requires a lot more dedicated time, patience, skill and knowledge while people prefer to investthrough Mutual fund route in equities, while you can diversify your risk by choosing to invest through Mutual fund rather direct equities or sometimes investor choose to invest through PMS (Portfolio management Scheme)
You can still fall prey of choosing wrong scheme, here is a reference to fund managers, keep an eye for these traits in your fund manager
- Style : Index Fund
- Meaning : The fund manager invests to match some index like S&P 500
- Reference: The fund manager has given up trying to beat the market.
- Style : Active Management
- Meaning : The Fund manager picks up stock that will do better than the market
- Reference: The triumph of hope over experience. You the investor are paying for the experiment.
- Style : Momentum investing:
- Meaning : The Fund manager chases whatever is going up
- Reference: The lemming or crowd theory of investing; the investment equivalent of a finish proverb: ‘shit must be good, millions of files can’t be wrong’.
- Style: Value investing
- Meaning: The fund manager invests in undervalued gems that he has uncovered through research.
- Reference: Pure luck or you hope that fund manager has inside information.
- Style : Yield enhancement
- Meaning: The fund manager invests to generate above market income
- Reference : You are talking on a whole lot of risk. You will be lucky to get your money back intact.
- Style: Portfolio insurance
- Meaning: The fund manager guarantee that your investments at least 90% of it is safe
- Reference: Hang on wasn’t the return of Principal the least that you are entitled to?
- Style: Structured investment
- Meaning: The fund manager will specifically design to fit your exact risk and return parameters using sophisticated investment tools and financial products.
- Reference: A pure con job to charge you more fees
- Style: Alternative investment
- Meaning: The fund manager will invest in hitherto unknown assets weather derivatives catastrophe bond art stamp etc
- Reference : You are at an investment pioneer good luck !