MF investors are losers always. Why?

Sentiments, Greed & Fear play an important role here. Retail investors mostly don’t have knowledge of the best funds to invest.

Greed: Once the market is up and there is news all around the media that the markets have made big gains. Only then people realize that they have missed a good opportunity and rush to invest. But, most of the time media talks about investment, it happens to be marketing in the final stage. After the retail participation comes in, just what was expected for the smart money to get out of their holdings, the market takes a ‘U’ turn. The beauty is that it does not happen at a clip, it gradually moves down, giving time for the late entrants to confirm themselves that their decision is right and makes them to hold on. Eventually over a period, the fall will accelerate and our retail investors have no other option but, to hold on.

He continues to hold to such a level where the media again begins to drum up news that everything around the economy is bad, as if the world is coming to an end. Is this not enough for people to wind up their position giving relief to the pain they had gone through holding on to the losses?

They get out with a decent loss.

Fear: After having bitten with a good amount of loss and shaken off from their confidence, fear grips their minds. They do a resolution to themselves, never will I enter into the equity markets, there are only loses in it! No one makes money investing in equities. To support this their spouses would have given their dose of beautiful responses. But, now they have money which is idle in their banks, mind does not keep quiet, even if it wants to, the surroundings don’t let us be so. Then search for some safe avenue investments, which even if it is giving returns of less than the prevailing inflation rate, they are happy that they are not losing.

Sentiment: We have a natural tendency to get attached to anything that has a long association with us, we don’t want it to depart. And beyond that is the confused state about ‘what if I sell and the NAV moves up, I will lose some opportunity just because I decided to exit’. In this category holding is infinite, they just forget the investment. 

This cycle continues with Greed coming again after the market makes news about FII’s bringing in billions of dollars, Sensex gives 15% returns year on year. Companies are doing well, some of them growing at a pace into not thought off levels. Is this not enough for us to put the fear off and re-think our strategy about equity investing?

While this drama plays out in the retail investor’s life, smart money from professionals and FII’s get in when the retail sentiment is dead, and get out when the retail is euphoric. They work like a machine, churning profits from the ignorance of the mass.

But, equities being one of the best returns providing asset class, how to profit from it either directly or through mutual funds? 

The only requirement is wise investment decision, have access to research data to find the best scheme or take advisory on investments.

There are 44 Fund houses in our country and among them there are about 600 schemes that invest in pure equities or a combination of equity and debt. The total funds invested in these schemes are about 7 lakh crores as of recent numbers. The best performing schemes as of today that have above average returns are around 12-15 schemes. This means more than 95% of the AUM in the mutual fund industry is losing value.

How is your mutual fund performance?

If it is coming into the later, losing value! Then its time you rejig your portfolio and move into funds that perform well.

How to find best funds?

It is a process which requires a lot of data crunching, which a common retail investor may or may not be able to do. But the investment that you make is your hard earned money and you will always want safety and growth to it. The wise decision would be to hire an advisor to guide you through the process of managing your funds. Advisors with performance based fees will the best choice.

As there is no free lunch, he will strive to give returns so that he earns for his efforts.

BraViSa Templetree provides performance based investment advisory to mutual fund investors. We have a rich data base of research on equities and mutual funds. This enables us to outperform the best mutual fund returns on a consistent basis.

To know more about the value addition that you get from our services, please write to info@bravisatempletree.com