The Hindu Business Line : How close you are to your fund manager?

If you are just an ordinary investor dabbling in mutual funds, chances are you will never meet your fund manager and be able to study his mind closely.

You will probably have to remain satisfied with reading his views in the papers or watching him on some of the more popular television channels.

In the circumstances, especially so when true information often gets hidden in a welter of useless statistics, how do you form your very personal opinion - and, believe us, such personal opinions can be important - about the people who are in charge of your money?

Monitoring a fund manager's antics is a job that is better left to specialists, is what most of them in the asset management industry will say.

This, however, may well go against an investor's true interests, particularly when there is no effective flow of information from those specialist organisations to the rest of the market.

So, is there a case for bringing the fund manager closer to the investor, may be in direct contact? While this question will have no easy answers, let us quickly raise a couple of points which may help create your own views on the matter.

Through disclosures

One, the average investor's information usually comes by way of portfolio disclosures and a few other financial statements. And by the time one statement has passed and the next one has appeared, there may have been a world of difference.

Two, the investor typically goes through a distributor, who may rather sell products than provide true advice. That, once again, makes things difficult for the person who is ready to write a cheque.

In the situation, few users of mutual funds will have anything more than a sketchy idea about an asset management company's true culture.

Take, for instance, access to critical information on a fund's investment personnel, courtesy disclosures. You will agree that awareness of such disclosures is an absolute necessity for unitholders.

Recent quitting

Mind you, there has been a recent case of a high-profile fund manager quitting his company allegedly because of what had happened in the past.

This leads us to a set of questions that even ordinary investors may want answers to as well:

Were formal charges brought against a fund manager, now working for Fund B, while he was with Fund A? Are these pending?

If a fund engages charge-sheeted personnel, are the circumstances leading to the charge-sheet disclosed adequately? Does the regulator have a view on this?

Has the fact been included in offer documents submitted to the regulatory agency after the date of charge-sheeting?

What has been the decision of the board of trustees? What led it to the decision in question?

With rapid evolution of the country's asset management industry, these issues will possibly become bigger in the days ahead.

Fund houses will begin to manage more than they thought they will, distributors will have more affluent clients, investors will create more wealth for their families. Invariably, there will be pools of information that only a privileged investor will have access to.

And, as surely as the next day's sun, some fund managers will attain larger-than-life stature.

All this will happen and you will have to keep an eye on the developments.

Feedback may be sent to nilanjan@thehindu.co.in

More Stories on : Mutual Funds | Mutual Confidence

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
How close you are to your fund manager?

`It has to be seen how capital-protection schemes are received in the market'

Nimble jugglers that deceive the eye

Mid/small-cap stocks may take centre stage