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I completely agree with Mr. Bond. Huge Patient is necessary in these type of situations. Debt funds have given excellent tax efficient returns. Here higher return is generated without much risk. Diversification protects Investors money. It is a message for all stake holders.
Other AMCs can also support by giving supportive statements. Otherwise such storm can kill an asset class. Thanks a Lot Mr. Sunil Jhaveri for the article.
lastly, for such a large exposure, that too which had 8 or more downgrades in 5-6 months, there was no collateral with the AMC.
.... If there has been one issue what is the hue and cry. The problem is not about three year old investor. The problem is about 1 month-6 month old investor who will have to wait for at least two years to see FD beating returns from FISTIP. It is only because of such dwindling AUMs that AMCs shall be on their toes in future, otherwise there will always be a justification for any action.
...2. One question was how come that a scheme like FISTIP which is targeted primarily for one year investment(It has one year exit load) had the highest concentration of JSPL and Duration Accrual Fund which has four year exit load had least concentration. Why it was important was because of high concentration, the scheme meant for shortest duration among accrual funds took the maximum hit of 2.13% within few days whereas Duration Accrual fund took hit of approx. 0.5% only. It means that an investor putting money for only one year in FISTIP took the highest hit, which is not warranted. 3. Till the time the event did not happen, the experience and deal making skill of the fund management team was showcased, but after the event, the same point was mentioned by the AMC as mentioned above that investors have got such lovely returns over last so many years. continued....
The intention of this article is appreciated and it is in the right direction. However, few points were considered to create the so called storm. 1. FT investment team had several meetings before JSPL event with IFAs wherein they always assured that there is no need to worry regarding JSPL papers. Even in Jan 2016, the same thing was repeated. As it did not turn out that way in next 40 days, more questions got raised. continued...
Thanks Mr. Jhaveri for sharing this article. Indeed youve outlined the matter in full black & white and highlighted the importance of an asset class in comparison with bank FDs. Regards,
Extremely rational views expressed by Sunil Jhaveri Sir...there is absolutely no comparison as far as his analytical skills are concerned in IFA fraternity....he should be the lead industry trainer and professor to all IFAs who want to make it big and are ambitious....only great behavioral finance skills other than analytical skills can create wealth....that must be the focal point for all IFAs...India needs lots of IFAs to pool big money in capital markets for long term sustainable growth of our country.....
Short term funds are positioned for retail fixed deposit money. We are happy to accept lower returns and do not want even the whiff of a controversy. When we fought in combat in the mountains, we were taught you will only take the enemy out if you survive General Winter, though I completely agree with your reasoning here for credit funds bought on portfolios.