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As the Indian mutual fund industry breaches the Rs 50 lakh crore mark, investors should be more aware of the pros and cons of mutual fund investing.
Let us unravel the truth behind mutual fund investing inspired by the writings of Benjamin Graham in his book – The Intelligent Investor.
A purely American creation, the mutual fund was introduced in 1924 by a former salesman of aluminium pots and pans named Edward G. Leffler. Mutual funds are quite cheap, very convenient, generally diversified, professionally managed, and tightly regulated under some of the toughest provisions.
Mutual Funds are not perfect. They are almost perfect, and that word makes all the difference. Because of their imperfections, most fundsunderperform the market, overcharge their investors and suffer erratic swings in performance.
FinSharpe analysed data for different categories of mutual funds.
Most funds that topped the ranks in 2019 have come to the bottom in 2023
Category : Large Cap.
Total funds considered during analysis : 23
Category : Flexicap
Total funds considered during analysis : 19
Category : Large Mid Cap
Total funds considered during analysis : 19
Baring a few exceptions, the performance ranking of funds based on one- year returns fluctuates significantly.
Four Reasons For Fund Performance Fluctuation
Why don’t more winning funds stay winners?