Who is the enemy of Investors ?

History shows that mutual fund investors generally increase inflows after observing periods of strong performance. blogThey buy at high prices when future expected returns are lower, and they sell after observing periods of poor performance when future expected returns are now higher.

This results in what author Carl Richards called the “behavior gap,” in which investor returns are well below the returns of the funds in which they invest. Perhaps with this observation in mind, Warren Buffett once said, “The most important quality for an investor is temperament, not intellect.” Continue reading “Who is the enemy of Investors ?”

Mutual Funds – Reading between the lines

Mutual Funds are subject to market risk. Please read the offer document carefully before investing”. The very blogpurpose of this disclaimer is to meet the statutory requirements. Only very few people would have heard it when it is mentioned in the radio or television as it flashes by at lightning speed. In print media (Newspaper, Magazines) it is published in extremely small font. Only investors who know the statutory requirements would even be aware of the statement because the advertisements, with ‘namesake’ disclaimers, are hardly educative.

So, what is the mystery behind the ‘flash’ statement? The statement means that mutual fund scheme invests the money collected from investors in instruments which are subject to market risk. Every investor of a MF should read the offer document carefully before they invest their money with the fund house. Continue reading “Mutual Funds – Reading between the lines”

Fixed Maturity Plans V/s Capital Protection Oriented Schemes

Exactly a month back I did a write-up on Fixed Maturity Plans V/s Fixed Deposits where both the instrument are issued by different authorities i.e banks and mutual funds.

Today’s write is concentrated on Mutual funds schemes, I came across Capital Protection Oriented Schemes (CPOSs). As the name suggests, the mainstay of such schemes is to provide capital protection. Structurally they are similar to another existing mutual fund category called Fixed Maturity Plans (FMPs), which has been around for a while. For investors, the presence of these categories which are structurally similar, yet distinct in terms of positioning can be confusing. Continue reading “Fixed Maturity Plans V/s Capital Protection Oriented Schemes”