Can better fund research fix capitalism?

“We have met the enemy and he is us.” — Walt Kelly We blame capitalism for most of our modern ills, from climate change to iPhones that die every two years. Yet we rarely bother to read the sales pitch our accountant, banker, or adviser gives us for the mutual funds to invest our hard-earned
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The value of dumb questions

Being an outsider, as I have been for most of my life, brings with it a feeling of inadequacy. To hide this feeling, I did what many others do – I would preface questions with ‘Hey, I am new here….may I ask a dumb question?’ Today, I care less about what people think of me,
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Classifying funds

Investment decisions rely on performance of funds universe including that of the median and various quartiles. Hence, the universe category definitions and classifications are very important. Unfortunately, AMCs have multiple funds in the same category with significant dispersion in returns. To make it worse, leading rating houses have different classification methodologies resulting in different classifications.
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Funds research…deconstructed

I love watching cooking shows. It doesn’t matter that I don’t cook. I watch for enjoyment sake, and perhaps for the comfort of knowing that in a cooking emergency, I will be able to put something together. One concept that I always get fascinated by is that of ‘deconstructed’. Chefs separate or deconstruct the ingredients
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Why good mutual fund research is hard to find

There are many brilliant books on stock picking, from simple beginners’ guides to classic textbooks like Ben Graham’s Security Analysis and The Intelligent Investor. I could find only one credible book on mutual funds: John Bogle’s Common Sense on Mutual Funds. Bogle’s advice? Investors should put their money in index funds. A number of finance luminaries — Warren Buffett,
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Why you shouldn’t invest in 5-star rated mutual funds

Ask any investor how they select mutual funds (MF) – the most common answer tends to be on the basis of star ratings. Such is the allure of stars that it doesn’t appear to matter whose stars. I know so, because I spent my career in fund research. And no matter how different my firm’s
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Role of financial ratings

When people hear the leader of a country comment on how a credit rating agency should rate its debt, they realise credit ratings are important. When they read about the role of credit ratings in the global financial crisis, they get angry about the finance industry being responsible for their misery, but figure they must
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Making sense of too many products

Like in many other markets, the mutual fund industry the world over seems to have a dazzling choice of products, but with the top few dominating assets under management and inflows. In the US, there are more funds than stocks. Even in a nascent market like India, there are more than 1,000 choices, and that’s
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Fund managers need the right temperament

What kind of people make good fund managers? While everyone should be interested in this question, there is surprisingly little research on this topic. Dr Jack Gray talks to Hansi Mehrotra about his efforts and findings. While the general perception may be that investments is about numbers, investment professionals everywhere agree that money management is
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Forget track records for responsible investing

The United Nations Principles for Responsible Investment now claims over 550 signatories with more than USD 18 trillion in assets. UNPRI provides a framework for institutional investors to integrate environmental, social and governance (ESG) factors into investment processes. Also, the International Finance Corporation has sponsored a study on the prevalence of RI in emerging markets.
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