Facts and Figures

Dear All,

These are some facts and figures


Average 3 Yrs Equity Mutual Fund Returns    :    6.7 %

Appx. 40 % of the Funds underperformed the average.

Average 3 Yrs E L S S Mutual Fund Returns    :    6.8 %

Appx. 60 % of the Funds underperformed the average.

Average 3 Yrs Closed Ended Equity Mutual Fund Returns    :    4.1 %

Appx. 60 % of the Funds underperformed the average.


Bank Interest prevailing 3 yrs back was 10 % to 13 %.



Average 1 Yr Bond  Mutual Fund Returns    :    4.8 %

Appx. 45 % of the Funds underperformed the average.

Average 1 Yr Gilt Mutual Fund Returns    :    2.5 %

Appx. 65 % of the Funds underperformed the average.

Average 1 Yr Floating Rate Mutual Fund Returns    :    4.3 %

Appx. 65 % of the Funds underperformed the average.

Bank Interest prevailing 1 yr back was 5.5 % to 6 %.


Please note :

This data is noted as on 31.05.2010 From Value Research

It is being widely debated, as to why people are shying away from
mutual funds, and are in fact withdrawing their investments. The above
date clearly shows why fundamentally the bank has been the better
option. Normally, market investments carry higher risk due to markets,
and so normally investors look to invest in them to get better returns
for the risk that they take. However we note that investors have not
been compensated sufficiently for the risk that they have taken.

So, the notion that investors are shying away from investing in the
mutual funds, due to distributors taking the back seat, as their wings
have been virtually chopped off since Aug 2009, is totally incorrect.

Just 3 yrs back many investors were queing up to AMC offices, applying
online, calling up the distributors, hurrying, borrowing to invest in
I P Os. Now, nobody is doing that. People were voluntarily queing up
to apply for IPOs. Most IFAs were not selling IPOs.

Why? The reason is obvious. Lack of returns. The market may be @
18000, but where are the returns? If these be the returns when the
market is @ 18000, imagine the returns, if the markets were still
languishing.

Also imagine the returns, if you take into consideration entry loads,
or the upfronts that they are expected to pay us. What returns will be
left in their hands, that too in the peak of the market? A point to
ponder?

Moreover, a majority of the funds have given sub par returns. This
gives a bleaker picture than most would imagine.

In such a scenario, how do we expect investors to invest in mutual funds?

I think that we have to put our minds together, and shift the focus to
the Fund Houses, to up their ante and find ways and means of improving
their performances, vis-à-vis the average, so that the investors do
not get a raw deal, in markets as volatile as they are.

I invite suggestions, on my observations, and suggestions on the road
going forward in the light of my observations.

Harish
Time Financials


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