If you are/were a fund manager working in India (presumably staying in Mumbai) and did not know what was happening in ILFS, you do not deserve the salary that you get. Let me go a little further, you should be stripped off your degrees too.

As a person dealing in shares, I have spoken many many times about the quality of management in various forums and in various posts. ILFS surely left a lot to be desired in its choice of projects, products, etc. It did not require a PhD in finance (or Risk as Taleb would say!) to know that Ilfs was not exactly a Dettol dipped company worth investing in. Ilfs mutual fund was not exactly the first choice for investors, was it? Anything coming out of the ILFS stable had one big risk – no promoter owning up, nor anybody with any skin in the game.

Come on guys, we all knew that. I am not sure how many articles magazines like Moneylife must have done on such practices, but I guess we have to leg bygones be bygones.

Nobody worth their salt (and own skin in the game) would have PERSONALLY touched ILFS assets.

Now coming to how Fund managers think while investing in an asset:

1. ILFS is a finance company, and it will DARE not default, because the company’s existence is in threat.
2. ILFS is owned by the biggest banks/ brands and they will ensure that the brand name will not be spoiled.
3. ILFS is rated so high by the credit rating agency, they MUST have done their due diligence.
4. ILFS has been around so long that nothing can go wrong.

Wrong on all 4 counts. Too many owners means no owner. No, nobody was bothered about the reputation. I never liked Noida Toll bridge – I was sure that the value unlock will never happen. I have had discussions with India’s extremely well known ‘Value’ manager and told him that many companies in this group have a good dividend yield for ONE reason. The numbers are NOT trustworthy. Yes, It had (has) a ‘reputed’ board, but for me the ‘skin in the game’ was missing. Employees pretending to be entrepreneurs is a joke. Somebody said on my timeline that ‘esop holding’ is like risk taking. Gimme a break guys. You need to re-learn about risk.

What is the implication for you as a mutual fund investor? well my friend does a far better job than I can do..so read on…

http://mfcritic.blogspot.com/2018/09/ilfs-debacle.html

https://www.bloomberg.com/view/articles/2018-09-17/il-fs-causes-india-to-rue-its-own-belt-and-road-debt-fiasco?utm_campaign=socialflow-organic&utm_content=business&utm_source=twitter&utm_medium=social&cmpid=socialflow-twitter-business

Ps: I have no connection with Ilfs, Idfc, idbi, lic, icici,…..but I may be holding an account, and even owning some insignificant shares, puts or calls 🙂 make up your mind, and take your decisions accordingly.

btw I have never understood how a company OWNED by psu is called a pvt-public enterprise…