USELESS MUTUAL FUNDS

In the past twenty years or so, mutual funds have caught our attention. Especially in the last decade these funds have been very actively canvassing for investment from the ndian public. The surplus income of the Indian middle class has been the target of the mutual funds and they have succeeded enormously in attracting them.

Even LIC of India has ventured into mutual funds and launched some fund schemes. Its Market Plus, Bima Plus, and Money plus are some famous ones.

For starters, mutual funds invest money into the equity market and share the income from the share trade with their investors. Some funds invest in a combination of debt funds and equity. All mutual funds charge their customers for managing their funds. Plus they penalize a customer for withdrawiing money before the lock-in period of the fund.

The attractive tag of the mutual funds has been the  claim that there is no Tax Deduction at source and that the investors get a windfall.

My question is this: How many mutual funds have earned good money for their investors ? The most glaring example has been LIC 's money plus. It was a flop of gigantic proportions. Investment poured in thousands of crores worth of money into this and after six years has given a growth of 47 % where as even a fixed deposit in a post office would have fetched 80% returns in six years. Many funds have been simply disasters.

Mutual fund companies hire smart looking MBA s who paint a rosy  picture of their company. All of them are very highly paid and their salaries and perks have to come from the investors only. They continue to thrive well at the expense of the investors while the investors are left in the lurch. The input load and exit load of mutual funds point only to this.

In the three major stock scams, the biggest beneficiaries have been some  mutual funds.  I desist from naming them, but, any  competent browser of the internet will get details.Harshad Mehta and Ketan Parikh have simply been the scapegoats while the biggest profiteers were these mutual funds. As expected, they got away scot free. But, this scam money went into their scoffers and never reached their investors.

Share trading is a dangerous game. How a share fluctuates within a day is a mystery. Those who invest may never know the company's performance before trading its share. It has become a blind game while the real strings are pulled by the mutual fund companies. They can swing the sensex up or down in a matter of weeks. But everything is done for fattening their own wallets. The investors are treated like dust.

I urge my reader to select some famous mutual fund companies and after logging into their websites, to take note of the performance of their prominent funds. For example, take a block of ten thousand rupees and calculate how much it would have fetched you in a give period of time , say eight years from the year 2006 onwards.

Now compare how much you would have got if you had invested the same in a post office deposit. You would have made a profit of 100 % or Rupees ten thousand in these years.