The Tortoise Speaks...

A blog which periodically revisits evergreen investment principles!

Tag: Mutual Fund

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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The art of Bad-vising

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On September 30, 2013

In Investing

By Ankur Mahajan, [email protected]

“We’ve done a lot of stupid things but we’ve avoided a small subset of stupidity and that subset is important. It’s about avoiding the dumb things” – Warren Buffet

There have been a considerable number of arguments and an equal number of blogs and posts written about the plight of a retail investor. One of the prime subjects have been the many grounds where a typical investor conks out to make returns in the market. “Market makes returns, but the investor doesn’t” has become the slogan of the Aam Investor (on the lines of aam aadmi). And there have been umpteen reasons attached to the same. Some of them being getting carried away by greed and fear, investing after the bull run, redeeming during the bears, chasing fancies, investing without understanding, etc. While it is easy to blame the investor on the lines of an aam aadmi who pay taxes but abstains from voting, there is a compelling need to question the role of your advisor and his ability to avoid deviating from the fundamentals.

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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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