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Thank you sir , for your statistics and analysis. Based on this logic I would add that , the balanced funds shall also be added to the negative list.In typical balanced fund , there is almost 40% of portfolio in unknown risk zone. This is a must read article for all the IFAs in particular. I would only be glad , if this reaches to investors too.
Offering Duration fund to a retail investor is like offering him one more volatility investment option (equity related schemes has already volatility). Mr. Jhaveri has strong belief that Duration funds are not for retail investors. Earlier in different platforms also, he has always shared his views very strongly. He put all the facts to us which hardly we find elsewhere. So when AMC has different product basket in Debt category, IFAs should first find out product suitability (while advising Duration Fund) to the investor.
Advising retail client on duration call is really something that is dangerous which I have also experienced in past. Retail investor and specifically firat time investor should totally be kept away from the duration based calls and long term debt fund as well. The volatility and MtoM losses in debt fund is something which may cause the investors trust to vanished from MF as a basket. Even retail IFAs should keep the safe distance from these calls. I truly agree with Mr Bond.
Another "CUT AND KEEP" article Mr.Bond. Duration Funds are for only Informed Investors and definitely not for Retail Investors. One way to deter Retail into this category, could be by raising the Minimum Subscription Amount to at least Rs.10 lakhs! Duration Funds has its place and does make sense but not for Retail investors. Retail Investors invest in Debt for "Safety" and "Visibility", both of which are defeated in Duration Funds, as clearly explained by you Mr.Bond. Thank you very much Mr.Bond for the sensible and absolutely valid essential points raised by you. Appreciate.
The Best part of your story was that AMCs themselves are the Big Culprits and advisors listening to them. In Fact the same sad story is repeated time and again in Equity Funds too. This has ensured a LACK of CREDIBILITY among the masses and hence the HUGE difference in investments made in Mutual Funds versus Fixed Deposits.
Absolutely right Mr. Bond... Retail participants always trapped in such funds...
The point to understand is that investors were looking for simplicity and not high returns with complexities. They were happy with FD , PPF, etc. we as an industry have offered them complexed products that they dont relate to and we have made them greedy. Offering simple solutions will not only give them peace of mind but also great returns and help them in wealth creation. Sector calls, beating markets in short term, best funds etc have only backfired. Again let me say we have fact sheet returns where are the folio returns.
Sir, What is your take on Dynamic Bond Funds?
a good advice definitely to follow by all
100% correct. Long term income funds are NOT for retail client & for your average IFA. They are much better off with short term funds or medium term accrual funds at the most.
Well said, Sunil! Typical investors in Income funds are looking for predictable & steady returns, not volatility and are not traders
Your should have a weekly column...will be of great service to the industry.