Mutual Funds rankings trap!


Mutual fund ranking is another media creation. Media needs to create stories daily. So it helps to have quarterly results. If you have 200 companies 4 quarterly results and 200 final results ensure that 1000 stories are ready. Similarly, if you 250 schemes and you have monthly rankings (thank God it is only monthly and not weekly) you have 250 stories a quarter!

Rankings also help the distributor – he goes to the client and says “See xyz.com is saying that Franklin India Blue chip is in the 3rd quartile, please invest in BFS Equity fund which is the best performing fund for the past week” So the client obliges. This helps the distributor earn his commission from churning.

It helps the site to get some publicity because BFS Equity spends a lot of money in publicity for itself claiming it is the best fund – and quoting xyz.com. That is nice.

Who is paying for all this? The people who advertise on xyz.com – which is largely all the mutual funds! What a nice game – some of this is taken away from your Nav – so you are paying.

For the investor the problems are….manifold. I will mention that in a separate post!

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One Comment on “Mutual Funds rankings trap!”

  1. James Borton Says:

    As a blogger and freelance journalist covering Asia’s emerging markets, I am interested if anyone knows of an individual or company tracking and evaluating Vietnam’s funds. (offshore and onshore.)

    Please let me know.


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