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A map and a guide

Mutual fund investors need a map of where their investments have reached and a guide to take them further

A map and a guide

Most of my interaction with investors are with those who have a fairly good awareness of what is going on with their portfolio. These people may not have a precise analytical view of everything but they know the basics: how much their investments are worth, which funds are doing well and which are doing badly.

However, I sometimes forget that this is actually the exception. A majority, perhaps most, mutual fund investors are not actually investors but fund collectors. They - and this is the most important part - are investing in a haphazard manner, flying blind, for no fault of their own.

'Flying blind' is a commonly used phrase for doing something without having any idea of where one is going. Of course, in the case of actual flying, it's OK because aircraft have instruments that enable pilots to fly when nothing is visible outside. Investors don't have access to such instruments. Or perhaps they do, but more on that later.

A crowd of funds
Just before the Chinese virus struck, an acquaintance who is in his early 50s came to meet me. Like many people, his career, which is in the hospitality industry, has taken a sudden negative turn and he finds himself earning a lot less than he used to. He wants to retire at some point not too far into the future. Most years in the past, ever since he started working, he has saved money by making at least the tax-saving investments in March. Generally, this has been in the PPF. He has also been making many mutual fund investments, always pushed by some agent or the other whom he came across in his profession. In recent years, he had also made a beginning with the National Pension System (NPS).

So far, so good. Now comes the shocker. Overall, apart from his PPF deposits and NPS, he has investments in about 70 (SEVENTY!) funds. This is a very high number of funds in which to have invested but unfortunately, it's not all that uncommon. People whose fund investments have been driven by salespeople for many years commonly have investments in a lot of funds. In the past, salespeople got high commissions when the saver put his money into a fund, but much lower later. Therefore, the system incentivised them to keep talking the saver into investing in newer and newer funds under the garb of diversification.

Seventy may be towards the extreme, but many people have 20-30 funds, all collected haphazardly. In terms of trying to get a grip on where your investments are going, 20-30 is just as bad unless...

Making a map
...unless you have the right tools. As I've become fond of saying, that's where Value Research comes in.

Here's how we can help, not just if you have 70 funds, but even if you have only 10 which have just been collected in a random manner. So, what's the correct way of building a portfolio? The answer is certainly not, "Wait for a salesperson to approach you and then just put whatever money you can spare at the moment in whatever fund that he is hyping."

Instead, the answer is to start not with the investments but with your financial goals - those that are known and predictable. Most of us have these in plenty, from standard ones like a house and kids' education to retirement. Once you have a list of goals, you can plan investments suited for each, depending on the amount needed, the timeframe and other factors.

Now you have two problems. One, what to do with the pile of unsuitable funds that you have, and two, how to choose the funds that will actually meet your goals? Both get solved at Value Research Online. Within our 'My Investments' system, enhanced by the features we have added in Value Research Premium, you can solve the entire set of problems, starting with practically effortless entry of all your transactions (since you started investing) into 'My Investments'.

All you have to do is this:
1. Request your Combined Account Statement from the registrars (we help you do this).
2. Forward that email to our investment-tracking import system.
3. Get the most comprehensive analysis of your investments that is available in India.

There's no simpler way of doing this. This gives you a map of where you are. As for where you need to go, Value Research Premium has a set of invaluable tools, again, by far the best that any Indian mutual fund investor would have access to. Here's a brief description of some of what you will get:

Portfolio Planner: These are custom portfolios that are suggested to you as part of your Premium membership. The algorithm that we have evolved takes into account your goals, your income, your saving capacity and a number of other factors.

Analyst's Choice: Often, investors want to choose their own funds for some particular investment purpose. There are about 1,600 available to you and even with the help of our rating system, it's a lot of work to zoom in to the right set. However, that won't be a problem for you because as a Premium member, you will have access to Analyst's Choice. Instead of the 36 official types of funds, we have created eight investor-oriented categories which match precisely with actual financial goals that you have. In each of these, my team of analysts and I have carefully selected a handful of funds that will serve you with the best outcomes.

Portfolio Analysis: Only a few members are starting their investing from scratch. For most of you, a big question is whether your existing investments fit into your goals? This is often a hard question to answer because there are a lot of implications of switching old investments, not the least of which is taxation. In the Premium system, you can get an evaluation and a suggested fix-list based on our expert teams' inputs.

A map and a guide

There's a lot more to Premium of course. So, head over to vro.in/premium, read more details of these features, see glimpses of what Premium has to offer, read testimonials of our members and subscribe at a discount of up to 40 per cent.