A few people I know keep comparing themselves with fund managers – and can arrive at fantastic conclusions. Here is a case in point.

One female – nothing to do with equity markets in her professional life – was a sitting duck for many people selling financial products. To the credit of the salesmen she had all the schemes in her portfolio – belonging to 2-3 terribly performing fund houses. Even though she had some good fund choices too, they were not of very big amounts. She did not need any life insurance (rich husband, rich in-laws, no children) – but her portfolio was full of life insurance schemes, and a few pension plans. So here was a person who had not heard of asset allocation, SIP, etc. but had built a portfolio of Rs. 2-3 crores of ‘investments’ largely in debt products (what i call savings products).

Recently I ran into her at a ‘sathsang’ and she got chatting. She had started investing in direct equities – and had got out of the equity mutual funds. I was not worried because her husband’s portfolio was well managed (sorry ladies!). However, on probing she told me the following nice story.

In 2006 she had a lot of fixed deposits in banks and her bank was pushing her to put money in equities. So she traded heavily in MUTUAL FUNDS (hmmm…the entry loads you see!) but did not make much money in trading. She had churned her portfolio of Rs. 50 lakhs from Jan ’07 to June ’07. She had even held one or two schemes till Aug, 07. She then met somebody (could also be me, not sure) and based on that advice she decided to invest and hold for a few months (if not years). So she stopped trading, and invested in Dec, 07, Jan and Feb, 08. However she invested lumpsum – not minding too much about market timing or SIP. She had the money and needed to put the money to work, so she did it. However in Jan 09, Feb and March 09 she sold – because the markets fell (no she did not need the money).

However in June she picked up some courage and started buying some stocks. Given that the markets went up from there she did well. Well in the sense that her portfolio is up from June ’09. However she had no idea as to how much she lost in her mutual funds (she just knows she lost money) and how much her own equity portfolio is up.

Like if she bought BASF when the index was 9000 she could have bought it for Rs. 153 – now it is Rs. 445 (almost 3 times) when the index has gone up almost twice. That would have been great.

However she had bought Bharati (she was in the red in Bharati!), L&T, Hdfc, Icici etc. In most of these shares her money had not doubled – it had actually underperformed the index. However her conclusion now is

‘I CAN MANAGE BETTER THAN MY FUND MANAGER’ – SIMPLE i have already arrived at this conclusion, do not confuse me numbo jumbo like benchmark, comparative performance etc. In fact she told me ‘If you think this is just luck, pray I get lucky – but do not give me gyan on asset allocation, SIP, etc. it does not work for me. It may work for others.