Equity MF holding period under 2 years for 50% investors news from business standard Mumbai Mar 17, 2015 10:45 PM
When I ask people to invest in Mutual Funds, the immediate response that I listen was “Equity Market is Risky and they are not interested for Investing in #EquityMarket”. “Equity? I have never said anything about Equity Market?” It’s all good marketing of course. Like how Colgate is associated with normal toothpaste, Coke is synonymous with regular Cola, FiberFoam means Mattresses, Jhonson-buds are just regular cotton ear swabs same way people are thinking that Mutual Funds are investing only in Equity.
For that we can not blame only investors. From Advisor to AMFI’s campaign for mutual fund marketing “Mutual Fund Sahi Hai” everywhere we are just talking about Equity only.
Even though MF Industry’s almost 60% of AUM is in Debt Oriented Schemes (₹12.78 Trillion out of Total AUM ₹21.78 Trillion as of oct-2017) other than Equity category, People are not aware about that other than Equity there are so many options available in mutual funds which provides safety to their investment and also earns higher returns than FDs and other traditional investment instruments.
Mutual Fund is better option than direct investment in Equity Market for newbees because
- Mutual Fund is investing in lot of Equities which reduces the risk on an investment by support of another Equity in case of any company in the portfolio of the Fund gets busted.
- Mutual Funds don’t require as much time to research because the Mutual Fund Manager and other professional persons team do that for you.
Second reason while selling mutual fund we are just targeting to build Equity AUM. Building Equity AUM is not bad but while building we forget to secure Investors Investment. By investing entire amount in equity we make our investor exposed to high risk and try to justify that this investment is for long-term. For building #AUM we are selling #SIPs only by projecting higher returns. Retail investors are doing an #investment by seeing this projections of returns. Because this projections are based on higher market scenario. This will be true till the market is in upward trends when market turns in to downward trends so-called long term investments gets redeemed because investor is not educated to see loss on his investment amount. This is nothing but financial psychology.
As per TIMES Tweet Even in USA also nearly Two-Thirds of Americans Can’t Pass a Basic Test of #FinancialLiteracy.
If we really wants to build true long term AUM our clients needs to be educated about investment risk and we should also try to protect investors hard earn money.
This might not be looking good in today’s context but if your clients money is safe in downfall you will be the winner.
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