Portfolio check required

[vinvest]

One of the reasons is because stocks that get into index are based on market-cap (and some other wrong reasons). MF invest not just based on cap but also on the underlying businesses. Atleast, that is what they are supposed to do and quite a few of them do the same; and these are the exact ones that beat the index.

In effect, the criteria used to include stocks into indices is not performance-based. And returns from stocks is due to businesses doing well and not due to their market caps. Hence you see the difference.

The question here isn't why managed funds should do better.

History in the US and other countries has shown that 70-80% of the managed funds do not manage to beat the index over a long term.

One the posters said that Indian managed funds will beat the index over the long run. So we are discussing why they should behave differently than US managed funds.

 

[drsambu123]

So basically you are saying that Indian retail investors aren't as smart(or disciplined) as the US investors?

Even if true, how exactly does this affect the managed funds vs index funds performance?

. Only few retail investers make profits regularly and proportionately to sensex. There r plenty of jokes about retail investers.... like Always late in buying the scrip( when bullish).... etc

For example scrip A moves from 100 to 80 and hits stop loss of many retail investers(dumb money) So many retail investers sell.. Again scrip A moves to 100 in few days ..In this case the money lost by the individual invester will be gained by either an expert day/short term traders or MFS who sold at 100 for profit booking will reenter at 80... As for as the sensex( because of the scrip movement), remains same . But MF(smart money) made money in this movement.. i guess this way actively managed fund can perform better than index fund

 

[vinvest]

. Only few retail investers make profits regularly and proportionately to sensex. There r plenty of jokes about retail investers.... like Always late in buying the scrip( when bullish).... etc

For example scrip A moves from 100 to 80 and hits stop loss of many retail investers(dumb money) So many retail investers sell.. Again scrip A moves to 100 in few days ..In this case the money lost by the individual invester will be gained by either an expert day/short term traders or MFS who sold at 100 for profit booking will reenter at 80... As for as the sensex( because of the scrip movement), remains same .

This is true in every country - not just in India. So what is the reason that you think that a majority of the actively managed funds will be able to beat the index which isn't happening in out countries over the long term.

 

[drsambu123]

This is true in every country - not just in India. So what is the reason that you think that a majority of the actively managed funds will be able to beat the index which isn't happening in out countries over the long term.

In country like US , market is more efficient( market means most of the participants). In our country market is not that efficient. In one side MFS having sophisticated research team(as like any other advanced country MFs) and other side many innocent retail participants( who donate to the market) who doent even have access to online facilities... they just trade /invest based on somebody said/broker said etc.... In US also this happens.. But percentage of retail innocent investors are more here...
this is juz my hypothesis( what i could understand from reading articles).
Whatever may be the true reason, as for as the profit is more with actively managed funds we stay with good actively managed funds. As years goes the difference between index and active funds may come down.. At that time we should start including the index funds in our portfolio
Happy investing

 

[vinvest]

In country like US , market is more efficient( market means most of the participants). In our country market is not that efficient. In one side MFS having sophisticated research team(as like any other advanced country MFs) and other side many innocent retail participants( who donate to the market) who doent even have access to online facilities... they just trade /invest based on somebody said/broker said etc.... In US also this happens.. But percentage of retail innocent investors are more here...

Is there data to support the claim that India has more percentage of retail investors?

this is juz my hypothesis( what i could understand from reading articles).

I think this is just propaganda by Mutual fund companies.

Whatever may be the true reason, as for as the profit is more with actively managed funds we stay with good actively managed funds. As years goes the difference between index and active funds may come down.. At that time we should start including the index funds in our portfolio
Happy investing

Even in the US there have been 3-4 years stretches when a lot of mutual funds beat the index. But over a longer term 70-80% of mutual funds do not beat the index.

 

[seetharamank]

This is true in every country - not just in India. So what is the reason that you think that a majority of the actively managed funds will be able to beat the index which isn't happening in out countries over the long term.

people have a wrong impression or myth as they call it private is efficient publicsector inefficient,USA everything is great ppl are welleducated well aware etc which is not true as a mutualfund advisor my experience is different i find SSBI magnam is the most mutualfund house LIC is the best most of nationalaised banks are more cheap in cost service providers etc LOL

 

[drsambu123]

Is there data to support the claim that India has more percentage of retail investors?


I think this is just propaganda by Mutual fund companies.


Even in the US there have been 3-4 years stretches when a lot of mutual funds beat the index. But over a longer term 70-80% of mutual funds do not beat the index.

Hi I told at my first post that there are many reasons.... Juz i wrote what i guessed .... I am an individual investor... not an MF agent .... I dont have any connection with any of AMCs....
So decide yourself whether u invest in active MF or index fund
Happy investing

 

[pavvu_kk]

The question here isn't why managed funds should do better.

History in the US and other countries has shown that 70-80% of the managed funds do not manage to beat the index over a long term.

One the posters said that Indian managed funds will beat the index over the long run. So we are discussing why they should behave differently than US managed funds.

I guess you didnt get the point. managed funds in US couldn't beat index coz index composition is efficient there. And thats not the case with Indian indices.

 

[palka]

managed funds in US couldn't beat index coz index composition is efficient there. And thats not the case with Indian indices.

That is an interesting point that you make. Please elaborate for our benifit.

as a mutualfund advisor my experience is different i find SSBI magnam is the most mutualfund house LIC is the best most of nationalaised banks are more cheap in cost service providers etc LOL

Ranks within respective groups: (position/total no of funds) [3 yr return]
Magnum taxgain 14/29
Magnum contra 74/191
Magnum global 124/191
magnum midcap 180/191
Mag multi plus 71/191
SBI bluechip 138/191

LICMF Equity 143/191
LICMF Growth 150/191
LICMF India Vision 150/191
LICMF Opportunities 178/191
LICMF Sensex Adv 165/191

Awesome performance I must add.

And you are one hell of a Mutual Fund advisor. :yahoo:

As years goes the difference between index and active funds may come down.. At that time we should start including the index funds in our portfolio

Already 1 in 2 diversified equity MF is underperforming the index. Should we still wait?

 

[marvel_blr]

Yes, true. But it also depends on how long you hold the ETF. If you are holding it for 1 year, it becomes very significant. If you are holding it for 10 years, then the brokerage becomes negligible.

That said, I invest through ICICI Direct - since I trade less than 10 lakhs a year, I get charged 0.75% as brokerage. What alternatives can I look at for a lower brokerage. I think Reliance Money charges the lowest (don't know how much). But I have faced no issues with ICICI Direct over the last 3-4 years. So I was wondering if it's a good idea to switch.

If are paying 0.75 you must be able to get a better deal. How much is your monthly volume on an average?