These are different times. This is what AMCs, fund managers and market commentators tell you when asked if they see any excesses in this bull market as mutual funds rake in record money.
On the face of it, it does seem that both investors and the mutual fund community are on their best behaviour today when compared to earlier bull markets. Unlike 1999-2000 or 2007-08, plain-vanilla diversified equity or balanced funds are attracting the bulk of the inflows this time around as compared to fancy sectors or thematic funds last time around.
Thanks to concerted efforts at promoting them, systematic investment plans (SIPs), rather than lump sums, have become the preferred route for retail investors to buy funds. The message that investors should select funds on the basis of their track record has been driven home too, with older schemes raking in much of the moolah and not NFOs.
But the fact that seasoned investors, AMCs and advisors are not committing these age-old mistakes, doesn't mean that the mutual fund market is now wholly mature and free of irrational exuberance. After all, given India's demographics, every new bull market sees hordes of newbie investors discovering mutual funds for the first time, many new distributors joining the fray and also AMCs which are keen to gather AUMs while the good times last.
Queries from investors writing in to Value Research and anecdotes from long-time advisors and mutual fund insiders suggest that there are four key types of mis-selling and mis-buying behaviour prevalent in the market today. While we share with you the first myth today, we will be sharing some more during the course of this week.