Amol Joshi, Founder of PlanRupee Investment Services, and Harsh Roongta, an independent financial advisor, gave some advice on mutual fund scheme investments, on BloombergQuint’s weekly series, “The Mutual Fund Show.”
It is very important to recognize what not to do while investing in mutual funds than realizing what to do. Investors must concentrate on choosing the right type of mutual fund rather than giving more importance on deciding the right fund, said Roongta.
The right asset allocation would at last “play a larger role,” stated Roongta for which Joshi agreed.
“Red flags are equally important while selecting a mutual fund scheme”, said Joshi, and this would facilitate an investor to achieve the goal.
The Founder of PlanRupee Investment Services suggested that AMCs which have been examined by a regulatory body ought to be a good lesson for the investors, advisors, and the fund house. He further recommended that looking out for recurrent and remarkable changes in the expense ratio.
According to Joshi, it is important to choose the kind of AMC which has been dealt with. Any adverse comments or observations related to an AMC from any regulatory body should be considered as a “good red flag.”
The independent financial advisor advised the investors to stay away from dividend option schemes, as he feels that mutual fund dividend is meaningless and that it is the investor’s own money coming back to them. He also guided the investors to pay attention to the regular alterations in the fund management team.
ULIPs make no sense based on Roongta’s personal view. He feels that mixing an investment scheme with an insurance scheme makes zero sense. A ULIP sold as an investment product is similar to mutual fund dividend.
If a person mentions dividend with respect to a mutual fund scheme except for arbitrage, or if someone mentions ULIP (Unit Linked Insurance Plan) as an investment product then he or she is the same, said Roongta, according to Bloomberg.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]