{"id":427,"date":"2020-04-27T07:10:05","date_gmt":"2020-04-27T07:10:05","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=427"},"modified":"2020-05-13T14:54:27","modified_gmt":"2020-05-13T14:54:27","slug":"invest19-a-light-at-the-end-of-the-tunnel-of-mutual-funds-mess","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/invest19-a-light-at-the-end-of-the-tunnel-of-mutual-funds-mess\/","title":{"rendered":"Invest19 \u2013 A Light at the End of the Tunnel of Mutual Funds Mess"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>Being risk-averse, investors usually receive guidance for investing surplus funds in mutual funds that would deliver capital appreciation which can beat the returns of the government securities. This constitutes the benefit of inflation and surrender investors current purchasing power and also restricts the exposure, which they get after unleashing in front of the equities. But, the recent announcement about the exposure of Rs. 422 crores in Funds of Funds (FoF) scheme of Franklin Templeton after winding up their six debt schemes that were carrying the credit risk got scary as the veteran mutual funds&#8217; managers with fancy degrees, having a long experience in handling the Asset Under Management (AUM) of billions could expose the funds of millions of investors to some shady investments.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list\"><li><a href=\"#Responsible_factors\" title=\"Responsible factors\">Responsible factors<\/a><\/li><li><a href=\"#Direct_Vs_Indirect_Returns\" title=\"Direct Vs. Indirect Returns\">Direct Vs. Indirect Returns<\/a><\/li><li><a href=\"#What_investors_should_do\" title=\"What investors should do?\">What investors should do?<\/a><\/li><li><a href=\"#What_is_Invest19com\" title=\"What is Invest19.com?\">What is Invest19.com?<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Responsible factors<\/h2>\n\n\n\n<p>It is\npainful to mention that the delegates of the mutual funds have shifted their\nblame to ongoing illiquidity in the Indian market due to the outbreak of\nCovid-19 that has restricted the bank and other financial institutions from\nlending to companies with moderate or low credibility. Moreover, the soaring\nredemption pressure from investors due to rising fears of Coronavirus as they\nare finding, sitting on cash, a better bet to bank upon has forced them to shut\ndown the six debt schemes. However, the initial idea of investing through an\nindirect approach is made to safeguard themselves from times of high beta and\neconomic slowdown while redemption pressure from investors is not a new normal\nfor the mutual funds in times of economic deterioration so the given statement\nseems unacceptable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Direct Vs. Indirect Returns<\/h2>\n\n\n\n<p>It is worth\nmentioning that investing in top five private banks since the global crisis\n(2009) have delivered 68.56% yearly returns till the beginning of 2019 and the\nvariable includes Yes Bank, which has been through huge carnage after the\nIL&amp;FS crisis and the maverick HDFC Prudence Fund has delivered 18.93%. Despite\nstellar returns from investing in top five private banks without making much\neffort on scrutinizing the financial statements of every company, the investors\ndecided to walk through the indirect way of investing and surrendered their\ncontrolling power over their funds to fund managers.<\/p>\n\n\n\n<p>The wind up\nof debt schemes has left the investors in panic as they are not able to\nwithdraw their funds immediately and have to wait longer. Even the long-awaited\nredemption doesn\u2019t guarantee the money back as many corporate bonds under these\nschemes are carrying a high risk of default that would leave nominal\nreceivables.<\/p>\n\n\n\n<p>The complete\nmassacre has left a question in the minds of potential investors that: Is it\nworth channelizing the funds&#8217; inequities through the route of mutual funds as\nlower returns are not taking the guarantee of a safe investment.<\/p>\n\n\n\n<p>Looking at\nthe constituents of six debt funds winded up recently, the corporate bonds\nundertaken by the company were not carrying the coupon of high credibility and\nconvexity of the bonds. \u201cThe move of investing in those corporate bonds was\nmore an aggressive bet rather than a safer one, which has grown scepticism over\nthe credibility of mutual funds. In comparison with equities, debt schemes have\nalways been a safer bet and collapse of debt fund schemes has activated the\npanic mode of investors,\u201d Kaushlendra Singh Sengar said. He further added that\n\u201cRather than diverting the control of investment into the palms of mutual\nfunds, the investors should invest themselves by taking proper guidance from\ninvestment platforms as they take no control over your money but guide you in\nrebalancing your portfolio and generate more returns in comparison with the\nparadigm of traditional mutual funds returns.<\/p>\n\n\n\n<p>There is no\ndenying the fact that investment in mutual funds comes with coupon risk and\nadvice of stay in for at least five years. Moreover, the selection of an ideal\nscheme requires the thorough scrutinize of the asset allocation by the fund\nmanager or any guidance from reputed Financial Planners for choosing the right\nfunds comes with a&nbsp; cost of consultancy\nthat diminishes the total outlay of the funds after some time. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What investors should do?<\/h2>\n\n\n\n<p>After\nobservation of yearly additions of funds into Mutual fund industry, one could\nstate that investors are agreed with stipulations of longer period staying,\npaying commissions to Financial planners, taking the substantial amount of risk\nat meagre returns. So, rather than investing through the mutual fund route\ninvestors can achieve their desired returns fulfilling the stipulations of\nsafety and control that mutual fund industry is unable to discharge by\ninvesting directly into equities that could deliver manifold returns with the\nhelp of Invest19 platform.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is Invest19.com?<\/h2>\n\n\n\n<p>Invest19, a\none-touch multi-lingual wealth building platform, is a blend of technologies\nthat provide expertise for every type of equity class to every kind of\ninvestors and make Investment easy, also help them to gain expertise\nthemselves. The merits of the platform are not restricted to building a\nportfolio for the newbies but also help the investors in rebalancing the\nportfolio, which gets hit hard due to weak selection of companies, from the\nguidance of our experts. The platform provides an opportunity to start the\ninvestment with a nominal investment of Rs 100 and carries a major\ncharacteristic of notifying the investors to make necessary changes in their\nportfolio if experts find any fruitful opportunity. The platform is designed in\nsuch a simple manner so that every investor could understand and not find any\ncomplication while building a goal-oriented desired portfolio.<\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 4,539<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"427\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">4    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Being risk-averse, investors usually receive guidance for investing surplus funds in mutual funds that would deliver capital appreciation which can beat the returns of the [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/invest19-a-light-at-the-end-of-the-tunnel-of-mutual-funds-mess\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":428,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7,11],"tags":[17,104,105,106,107],"class_list":["post-427","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-market","category-investment","category-mutual-fund","tag-stock-investing","tag-invest19","tag-direct-equity-investing","tag-mutual-funds","tag-mutual-fund-investing"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/427","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=427"}],"version-history":[{"count":1,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/427\/revisions"}],"predecessor-version":[{"id":429,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/427\/revisions\/429"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/428"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=427"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=427"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}