Mutual funds: Investor rip-off 101
Mint: Confessions of a fund manager
. . . the actual loser was the retail investor, because this same set of investors would now need a lot of conviction to enter back into a mutual fund. They won’t realize their mistake. That it is their stupidity that has resulted in the losses. Instead, they blame the mutual fund.
Ah yes, the ’stupid’ retail investor. Stupid for falling for high entry + exit loads, high expense ratios, big marketing budget AMCs.
. . . we have retail investors who lost 50 per cent of their money in the equity crash and are still giving us money. Somewhere the industry focus would shift from AUM gathering to getting quality investors in.
Yes, once again the ’stupid’ retail investor - sticking with a mutual fund manager despite huge losses. Tch, tch, tch.
Has thinking started at the owners’ level that this is not the business worth doing?
Definitely. Most AMCs have got huge support from their sponsor, that’s why they are surviving today. Whether the support came in the form of losses to be absorbed by the AMC or whether the support came in the form of investments in liquid or mutual funds. But without the support of the sponsors no one would have survived.
The sponsors put money at 9 per cent or 10 per cent of return when their own cost of borrowing was 15 or 16 per cent. And now they are realising that this business does not make sense. They would rather run a business that is profitable than one which is going to get valued on percentage of AUM.
What? No more % of AUM gimmicks? Awwww.
Such is the tough life of mutual fund managers: multi-crore pay packages with no accountability for performance. Poor fellows.
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