So many people claim to be a LONG TERM INVESTOR. The sexiest thing to be in the investment market! Are they really long term investors? Why does their ability to hold on shrivel at the first sign of market coming down? Why do they start thinking in terms of a ‘couple of weeks’ as long term?

Do they REALLY have a high tolerance for risk? If yes why is it that they find it easy to hold on during a bull run but exit at the first signs of trouble? Do they have a high tolerance for making money and NONE for losing money?

Sadly your agent aka broker has a clear conflict of interest – he makes money when there is activity. YOU make money when there is no activity! So most brokerage firms will give you a few transactions FREE and lure you into more transactions! This actually hurts. So if I am doing a session sponsored by a brokerage firm I am conflicted. Should a person open a demat account and a E brokerage account? Answer is YES. Should you trade? No. Answer is an absolute No.

If I were a fund manager, I would resign.

If I were a fund manager I would ONLY manage a PMS, never a big scheme. I would manage a fund size of about Rs. 100 crores, but under the umbrella of a big fund house. Why big fund house? Simply because I will have access to a big research team and thus will be able to look at more companies. This fund will have not more than 40 people – so the average size of each participant will be Rs. 2.5 crores. I would expect the investors to sign a 10 year non exit bond, and all of them will be in a dividend plan – when I think I cannot invest, I would give dividends, but dividends may be ONLY out of profits. In a bear market I will stay invested or be in money /debt funds…but largely the aim would be damage control. To be an investor in my PMS all of them should have an investment policy statement, a written description of the philosophy, goals, timing, strategy, asset allocation, risk profile, panic buttons, and how the account should be managed. If this is ready, I would read this, and then decide whether to take on the person as a client or no! 

I would also want clients to come in groups and make promises to groups about their investment philosophy – so that when there is a crash they will have a sense of shame to ask for their money back. The peer pressure that they are turning their ‘investment philosophy’ on its head will deter them. Clearly we are doing a lot of things wrong – in the Fund Management Industry, are we not?

I would give investors constant feedback, and maybe non financial rewards – like a meeting with the fund managers on a regular basis.

Look at our great fund managers and fund houses..do they really do anything for the LONG TERM INVESTOR?

Why not drop fees for fund investors on a sliding scale from the 5th year onwards?

Omg too much to ask? too complicated?

Not sure, but a very very UNWELCOME idea as one of the fund houses told me. The IFA also is not happy with a SLIDING DOWN scale.

Of course I would have a 7% exit load – and a sliding exit load going to zero only in year FOUR…and the loads of course comeback INTO THE FUND – so all the investors benefit NOT THE FUND HOUSE…aka the fund manager.