The Tortoise Speaks...

A blog which periodically revisits evergreen investment principles!

Category: Mutual Funds

Expense Ratios, Exit Loads and Miscellaneous Stuff

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On October 13, 2014

In Mutual Funds

Even though most people may understand this very well, let us define some terms at the outset so that there is no confusion.

Expense Ratio

This is charged by the fund house (AMC) to the scheme (investors money). Investors want this to be the lowest. (Conversely AMCs “may” want these to be the highest).

Entry / Exit Load Type 1

Although there is no financial term like Type 1, this is my own creation for simplicity sake. In this type, the entry and exit load (fees) go to the AMCs or Distributors. This is in addition to the expense ratio above. Obviously investors hate them.

These type of loads have been ELIMINATED in India. This elimination was not without its own share of controversies. More on this later.

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Can we really use FMCG techniques to market MF products?

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On September 3, 2013

In Equity, Investing, Mutual Funds

Jayant Pai , [email protected]

Mutual FundAt a recent mutual fund seminar, there was the usual lament about how funds are failing to gain traction among ‘small investors’. While several causes were cited, they mostly boiled down to mutual funds failing to resonate or ‘connect’ with investors.

It was then posited that mutual funds should take a leaf out of FMCG product marketing strategies. The underlying belief behind this was that small investors are no different from small consumers. As long as you attractively package the idea to them and educate them about the utility of the product, they will bite.

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Mutual Fund Scheme Selection : A Do-It-Yourself Kit

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On May 18, 2012

In Investing, Mutual Funds

By Jayant Pai | [email protected]

Choosing good mutual fund schemes is not an easy task for beginners. The same applied to me too. I too have undergone many teething troubles before finally honing in on a few rules which work for me. Initially, I relied on the advice of others, but my entire investing approach changed when I subscribed to a highly reputed magazine meant for serious investors. Today, my scheme selection process is a distillate of of several intrinsic and extrinsic factors. Here are a few of them:

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Mutual Funds: The missing “I” in Monthly Income Plans

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On June 5, 2011

In Investing, Mutual Funds

By Jayant Pai | [email protected]

I feel that the financial product with the most misleading moniker is the ‘Monthly Income Plan (MIP)’ offered by mutual funds. The nomenclature suggests that these schemes assure some income to their unit holders every month but this is far from reality. Many of these schemes not only declare dividend at irregular intervals, even the quantum of dividend declared each time varies widely. A bigger irony is that most MIPs offer a “Growth” option too, something which is anachronistic, to say the least. In a nutshell, “True-to-label” MIPs are more the exception than the rule.

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