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Saturday, January 14, 2017

Mutual Fund : Investor Return, Investment Return and Advisor Alpha...!

Investor Return, Investment Return and Advisor Alpha...!

by Mr. B. Padmanaban, CFPCM
Certified Financial Planner

Advisor's Alpha..!

It is the value added by the advisor, who not only inculcating the long term investments, and also keep moving the funds if it under performing over a period of time.

Investment Return..!

It is nothing but the fund generated over a period of time by the active role played by the fund managers.
 
B. Padmanaban,
CFP, Chennai 
Investor’s Return..!

Even though the fund generated good returns, often investor who is investing on their own or invest through advisor also, not stayed for the committed time to their advisor.
  
If you consider anything as an Investment, there are many opportunities keep coming time and again.

Opportunities Never Lost, Somebody has taken over it, and those we miss.

You can't live with one or two opportunity. To live with one or two, one should have so much of conviction, which hardly any one of us possesses.

Unfortunately, we were often trained to look and play safe, protection and expect only very less. Expecting more is SIN! When we write the exam for 60 marks, we often score lesser than 60 and if we want 60 marks, then we should write for 100 marks or at least more than 60 marks!

This is the only investment where everybody is getting a level playing field in terms of location, size. It is for mass and you can only invest through your surplus not borrowed one. Long track record and highly regulated and advisor is hand holding time to time. 

The only challenge where many fail to read or understand is confusing risk with volatility. These investments are volatile investments not a risky investment if the investor stay invested for a longer period of time.

Let’s look at the three in a real life scenario…

Investor’s Return..!

Investor's return is more or less mediocre returns, because either lack of knowledge, in many cases the investor is doing it on his own or constantly compare other investments after the investment is made, which eventually make exit quickly. 

Investor who believes, self medication is better and invariably failed miserably all over the years! Their EGO is much bigger than their expected returns.

Investment Return..!

In this, we have given our money to the fund manager who is a professional and who is having a big team and moreover he is less emotional than the individual. 

By actively managing the funds, he is creating moderately more return, than if it is passive in nature. For that we are paying some very nominal cost.

Advisors are simply cultivating the habit of long term investment by selecting those funds. This is need of the hour, no doubt. Those investors who stayed longer period with the advisor will match the investment returns.

Here, advisor’s can easily blame the fund manager or fund house for portfolio returns whenever it under performs and never accept that there is some control is with them and they fail to react due to so many reasons!

Advisor's Alpha..!

These are the advisor who always question the status quo. Over a period, they feel that their client is disciplined and what should I do next. Those advisors understand that the performances are cyclical and being an independent advisor no need to undergo all the ups and downs that the fund house is undergoing time and again.

Those advisors are willing to take active call, if their selected fund is not doing well over a period of time and taking responsibility for their active calls. Eventually create more returns, than the passive advisor.

They also feel that the brokerage they got, by actively managing their client money. 

Those advisors strongly believe that when the fund manager is taking active call many thing will go right, and something will go wrong, why not I do it, after putting so much of efforts in this industry. That is the time for the birth of the Real Advisor.

I strongly believe that any past is to learn and move forward and not accepting the same and living mediocre. It’s after all one life to live, accepting challenges is the way to grow exponentially.


B. Padmanaban, CFPCM
Certified Financial Planner
98843 49173
padmanaban@fortuneplanners.com
ty: 1 day ago
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Mutual Fund : Investor Return, Investment Return and Advisor Alpha...! Reviewed by S. Chitra on January 14, 2017 Rating: 5 Investor Return, Investment Return and Advisor Alpha...! by Mr. B. Padmanaban, CFPCM Certified Financial Planner www.fortuneplanne...

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