Wednesday, 24 August 2011

Is the mutual fund industry a big scam? A A A

Is the mutual fund industry a big scam? A  A  A
In this issue:
» Rating agencies to be managed by public funds?
» US dollar losing its sheen
» Global food prices near 3 year highs
» Government to ramp up infrastructure

One may not have heard much of Yale's noted investment guru David Swensen,
but he had quite a dramatic statement to make recently. Mr Swensen shred the
reputation of the US mutual industry by saying that the industry is a huge scam
that cost investors billions of dollars a year. According to him, the performance
data clearly showed that the vast majority of funds lag low-cost index funds every
year. Moreover, investors relied a lot on rankings made by other agencies when
choosing funds, which is tricky given that the rankings are highly subjective.

One of the things that matter according to Swensen is costs. Indeed, the lower
the cost of a fund, the more likely it is to do well in the future
 (relative to other funds). Further, he opines, that index funds tend to do better
than 'actively managed funds' simply because in the case of the latter most
 managers aren't good enough to offset the cost of their salaries and their
employer's profits. This results in relatively poor returns.

Although Mr Swensen is referring to the US mutual fund industry here, the
criteria for choosing mutual funds applies to India as well. For instance, Indian
investors have to give importance to the costs involved when choosing funds
since it has an important bearing on the returns ultimately generated. The track
 record of the fund is important in that it gives an idea of how consistent the fund
 has been in outperforming the indices. That said, depending solely on the past
 record without giving due consideration to the process involved behind stock
 selection does not bode well either. What essentially matters is the kind of
stocks that the mutual fund chooses to invest in. If the portfolio consists of
stocks that have sound fundamentals then there is no reason why the fund
should not outperform the broader indices from a long term perspective.

Do you think that mutual funds are doing a good job managing your money?

 I completely agree to the fact that most of the mutual funds do not deliver. We tend to forget that the investor has to bear the overhead of the fund. Wherever you come across an advosor wearing a tie, be on your guard. I have personal experience with Citibank, Tata AIG and of course ICICI & Reliance take the cake as the smoothest and biggest swindlers. Retail investors should not, rather must not fall for these glib talking so called fund managers. Rest assured almost all of them cannot read a balance sheet, let alone analyze it for your benefit. He/she is, rather naturally, interested in their target and commission. You can't fault them on that count. I would have done the same. Tell me how many fund managers, including the greats like Udayan Mukherjee insisted that you sell out in Dec'08 or in Oct'10? None. Why should they? Lonely voices like Simi Bhowmick, Shankar Sharma get drowned in the silk smooth con-talk of the wolf pack circling for your hard earned money.Richard Nixon, in his defense to Watergate reasoned that most of the people hate to take their own decision, they would rather out-source it to politicians. So, retail investor friend,-- take your own decision,at least you will have the consolation that it's your decision. You are not held a sucker by a mutual fund manager of dubious integrity.

I agreed that indian MF is a Big scam.  Even very Actively managed funds have not done much
ofcourse, there are good fund house & bad ones too.
But while selecting, we need to be careful.

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Monday, 4 July 2011

Be A Smart Investor

Be A Smart Investor

Some Private Banks are appointing Indian Beautifull
MBA passouts from small B School as Managers [ for name sake ]
and ask them to sell Insurance or mutual funds with big targets. In fact
this is a new way of Mutual Funds Agent. They like to called as 
financial planners.  

Now these Indian Beautifull MBA passouts from small B Schools
are always in search of so called HNI clients.

If you find any such Indian Beautifull MBA passouts from small B School
Make sure you really needs that Investment ??

More details coming soon .........

Bank Consumer Scams

Bank Consumer Scams

Many Agents [ So called financial planners ] sing about the virtues of mutual 
They will tell you mutual funds are great long-term investments with
 high returns and very low risk. In reality, the only thing mutual funds are 
good for is lining the pockets of people who sell and run them. Before you
 invest in a mutual fund, consider the following. 

mutual fund

mutual fund scam
mutual fund store scam
mutual fund fraud
stock scam
401k scam
annuity scam
fidelity scam
mutual fund performance
top mutual fund
mutual fund companies
mutual fund rates
mutual fund definition
money market fund
mutual fund store
mutual fund list

Usury is a sin. Burn in Hell, thralls of Mammon!j/k

credit card scams
credit card fraud scams
chase credit card scams
credit card telephone scams
capital one credit card scams
credit card fraud
credit card numbers
credit card debt scams
credit card scams online

agreed... and all the comments on his page also noted the gross amount of innaccuracies. if you want to get into nitty gritty details, you cannot make sweeping generalizations and pick the best points for your argument. while there are s**tty investment managers, there are tons of very good ones too.

Wow, I hope that all 100+ articles aren't this inaccurate or digg is doomed. Frankly, Mr. Chow is an idiot. His statements are misleading and although not always inaccurate, they are questionable at best. He states, "What about 'no load' funds? There is no such thing. All funds have a load on it. The financial planner will get his commission for selling you the fund. If you do not pay the commission, then the fund pays it.

They are paid an hourly rate or a flat-fee for the services they provide. It's up to the investor to seek out who they work with, they can pay an advisor through the backdoor with loads or an upfront fee, but there is no free lunch. Yes, there are financial planners and mutual fund managers that overcharge, but caveat emptor. All investors should do the appropriate research (examine expenses, historic return, volatility, asset drift, etc.) before investing.

Actually if they charge the maximum 8.5% fee, you actually have to gain more than 8.5% to break even.Example from my text:1000 invested85 goes to the managers915 is actually invested85/915=9.3%You need 9.3% to break even.

But what are inexperienced, uneducated, modest-capital, time-strapped investors supposed to do (besides index funds)?

The Reserve Bank of India (RBI)  must issue a show-cause notice to such bankers

Reserve Bank of India (RBI)  largely maintained silence over the frauds,

Earlier this year, RBI had fined 19 banks for mis-selling derivative products. 
Some years ago, in the aftermath of the IPO scam, RBI had fined seven 
banks for not following "know your customer" guidelines while opening 

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