Mutual funds have a new CV

Year ago, when I started out as a newbie investor, I called up my friend who was working with one of the largest and most respected mutual funds in town then. Of course, he knew a thing or two about mutual funds.

“Tell me which fund to invest in. I want to do some tax saving.”

He told me 1 ELSS or tax saving fund and I invested. That was the beginning of my relationship with mutual funds.

I didn’t care to understand any further about my prospective investment. A trusted friend had recommended them, that was enough. Why would I bother?

For a couple of years, I continued to rely on his advice until, I myself started to work with a financial advisory company.

Mutual Funds were one of the investment recommendations to most of the clients I was interacting with, for obvious reasons.

The client portfolios were skewed towards Bank FDs, NSCs, PPF, Real Estate and Gold. If none of these, the money just lay in the favourite Savings Account, which earned them a princely interest of 4% per year.

Their financial goals would have been endangered without a dose of equity. And mutual funds were a great way to take exposure to equity and build a diversified portfolio.

Of course, rising markets helped a lot in piquing the interest of the investor too. They were willing to consider mutual funds and my job was to get them to invest in the right ones.

As I immersed deeper into the world of mutual funds, I realised that there is so much to a fund scheme. In fact, every fund has a story of its own, a personality of its own.

If you know a fund well, you can actually find resonance in it. It strikes a chord with you. You would feel a sense of belongingness with the fund.

But this will happen only when you spend enough time to know your fund, its story.

I am sure you have come across some savvy investors who swear by their funds and even withstand periods of non-performance just because they believe in those funds or their fund managers.

They have spend time and effort in understanding those funds. They have almost been like best of friends, standing together through thick and thin.

The best part is you can do it too.

So, how do you get to know a fund better? How do you know its story? How do you make a fund yours?

Well, relationships needs time and effort. Being proactive too would always help.

This journey starts with trying to first know more about the fund itself.

If I were to take you 10 years back, I would be saying please go through the Scheme Information Documents, Factsheets, Fund News, etc.

And I know I would lose you right there. Who wants to go through the reams of pages (virtual of course). Patience is in scarcity these days.

Thankfully, there are several excellent information sources out there today that can present a whole lot of facts, information and analysis on mutual funds in a simple to understand format. You build your first impressions there.

In other words, make a start there.

Now, the information on these sources could still feel overwhelming, so much so that all that you want to do is to cut the chase and just

• look at the past performance numbers, or
• note the star rating or ranking,
• take that as a proxy for future results, and
• be done with.

Over and out.

This would be like looking at a photograph to decide who your life partner would be.

That would really be unfortunate and yet it happens all the time with mutual funds. I am sure you spend more time knowing your new smart phone or your new car.

I would encourage you to go deeper and realise that there is so much more to a fund beyond the performance numbers.

This includes basic facts such as…

• What has it set out to do, its objective?
• What kind of fund category does it belong to?
• When did it began its journey?
• With what index does it benchmark its performance?
• Who are the people helming the fund management?
• What kind of investing style does it have?

In fact, the performance is a result of all the above.

Then there is information such as…

• How has the fund fared against its benchmark’s including the best and the worst periods?
• Where is the fund currently invested in various holdings, sectors, etc?
• Where is the money invested in various assets (equity, debt, cash)?
• What kind of market capitalisation does the fund invest in currently (large, mid, small cap)?

Finally, where does the fund stand within the peer group?

There are so many similar funds out there. You would want to know how does a fund fare in comparison to other peers as also the overall category and benchmark.

“Whoa! That sounds great. But isn’t there a more succinct presentation of facts and information that you can go through? So that one can skip the web of information out there.”

Sure, there is.

I understand that the way information is presented currently may make it difficult to go through and absorb it.

Personally, I always had a view on how all this information should be presented to me and you. The aim should be to drive a better understanding of the fund. Remember, it is a beginning of a relationship.

Some of the most important facts and information about a fund should be available front and center.

At Unovest, we are able to put that thought into action. In a way, we have built this new mutual fund CV.

The Mutual Fund CV – Factsheet redefined

This CV is without clutter, with lots of space to allow you to look at and absorb key fund facts, to kindle questions in your mind, to go deeper with a fund and understand it better.

All key parameters as mentioned earlier are a part of this new CV.

Why don’t you check out about your favourite funds? Click here

 

This mutual fund CV is a start. While you will have a refreshing view of the key information around a fund, over time you will come to see funds in an altogether new light.

Now, when my friends call me to ask which funds to invest in, I point them to view the new Mutual Fund CV on Unovest.

Aren’t you excited to search your fund there?

Further read: Know your Mutual Fund

Here are quick links to the Top 10 Mutual Fund CVs. The top 10 are based on the largest Assets Under Management.

1. HDFC Equity Fund
2. HDFC Top 200 Fund
3. Reliance Equity Opportunities Fund
4. ICICI Pru Value Discovery Fund
5. HDFC Mid cap Opportunities Fund
6. Birla SunLife Frontline Equity Fund
7. ICICI Pru Balanced Advantage Fund
8. ICICI Pru Focused Bluechip Fund
9. HDFC Prudence Fund
10. Franklin India Bluechip Fund

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Between you and me: Do let me know what you liked and what more would help you get a better understanding of your funds?