Thus, performance no’s are very important for us before any investments decision. That’s quite ok with our banking & postal instruments like, fixed deposits (FD), recurring deposits (RD), Term Deposits (TD), National Saving Certificates (NSE) and Kisan Vikash Patra (KVP). Where rate of interest is fixed for tenure, but what’s about others? Like public provident fund (PPF) and traditional insurance policies. But there is no guarantee on their interest part, it will be changed by every year or may wish of the regulator. If it’s not guaranteed than why putting our hard earn money in it?
And what when we considered mutual fund’s schemes?
Thus, practices are same! What returns the particular mutual fund’s scheme was generated in past? Like, in 3, 5, & 10 and now we considering 15 years also than we later considering rolling returns. Because we heard, read or listen, somewhere that, equity is more predictable in long-term. But long-term is how long? Who will define?
As per our parameter to selecting a good equity fund, like 3, 5, 10 or 15 years performance and if we changing the started date by 3 months, 6 months or by a year than result will be completely different and even may not acceptable for us also. Because for consideration of tenure and performance couldn’t match with our tenure also. So return nos are nothing or don’t have any value.
Then we considered up and downside capture ratio. Now we come to know about another tool for selecting a good fund respectively. If we may able to select a good equity fund by using the capture ratio than also its not guaranteed that there will be a problem will not occurring in future with his performance or it’s an ideal match to our profile.
Thus, many mutual fund distributors argue that, they have suggested funds as per the profile of individuals! LOL.
Thus, most of the portfolio manager and fund managers considering co-variance as risk measure of a portfolio and where the particular manager was ignoring the investors risk preference truly. So if we found a good fund through analysis of capture ratio than it was happening just because of luck only and just tell us, which fund manager wish that, “I will managing my fund badly so investor will exited from my fund”? The answer is NO ONE. So ignore the funds and its performance, simply consider the process with two no of decent funds.
When overall universe of equity in bear phase than, how a performance no save us?
If we considered debt fund than by category of funds are very vast and acceptable level of risk also different for fund to fund. As per our understanding liquid & low duration is wise for our long-term debt holding respectively.
If we investing in a wrong equity fund than we may be a chance to come out with our principal in 3 to 5 years truly. But if we were invested in a wrong debt fund than, its take 1 or 2 decade respectively.
Thus, now we reached at end of the post, but what’s the solution?
Before going to solution, we will write a short story below. So enjoy the story and solution also hidden in the story respectively.
Just a few months ago we saw a video on You Tube by The Hindu or may by The Indian Express news paper. It’s an award winning video. We will went to present the contains of particular video in a very short story mode.
In nearer to final exam of students in a certain high school, the principal asked a parent to in a parents meeting that, what’s your percentage in your 8th standard? The particular parent doesn’t remember his per% or marks respectively and same question when asked to another parent than also answer was same.
So respective principal told to the whole group of parents that, forget the marks or per%, which will be nobody will going to remember truly. So concentrate on learning!
Similarly, forget the return nos, it’s just a nos of past or it’s just a post-mortem report and post-mortem report always related to a dead man. We are still living and our whole run is about to reach for better truly.
We considered the return nos because we don’t like losses or volatility in our portfolio and these return nos just provided optimism only and this optimism doesn’t provide us any margin of safety on your investments truly.
All these practices of searching good funds, simply developing, whole universe of behavioral biases among us truly.
So instead of searching right funds, simply ask for right process of financial freedom or asset allocation respectively.
Swayam Bichar Kijiye!
For any query or feedback please let us know below or mail us at: prabirsharma@gmail.com
Feel Bureau Investments 
MF on longer tenure of 10 years may be a good option. But one can always consider other avenues of short term investment such as direct Equity , debt funds, FD etc to suit individual requirements.
It’s depend on your overall asset allocation.
And direct equity also for long-term! If you get some chunk of money in short-term from direct equity than you are lucky by chanse.