The Best Fund Theory and Story

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“What is the best fund to invest in?”- the moment you type this you’ll get a host of websites telling you the answer. When internet can give you the answer; why do you need an advisor! It’s absolutely right. Today I am going to tell you about a very recent interaction with one of my prospective clients and would leave it to you to decide how far is it right for you to go with the answers that the sites gave you.

Mr X (requested not to be named) is 30 yr. old married guy with a good package in a reputed company. Before I met he was investing in mutual funds based on information from websites like Value-Research, Money control etc. Since he was aware of mutual funds and SIP’s, he started with SIP of Rs. 5000 in one micro­-cap fund and one auto-sector fund as the returns of these funds at that time were the best and were 5 star rated funds by these web-sites. After this he made some money with these funds and was now confident to invest more money in these funds. When he once again logged on to those websites to check their performance; those fund were not in the best funds category anymore.

He got a little confused. So he looked at the best funds that time with highest rating and added two more funds which were giving the best return. Now he had a total SIP of Rs. 10000/-.

He constantly used to track the performance and ratings of the funds he had invested in and kept a close watch on his fund performance. He started believing only when he keeps a tight watch on his investments; he will actually make money.

After some time, the funds which he bought at the first time (sectoral funds) were not performing as they were performing earlier and also when he looked into the website again, the ranking of the first two funds had gone down drastically. He got worried and immediately stopped the SIP and now started in one large cap and one mid cap avoiding sector funds. He took this step on the advice of one of the analysts in a television show who said one should avoid sectoral funds for long term investments But again he based his decision of choosing those large cap and midcap funds on the basis of the their ratings and past performance.

This continued for a while and he had almost 12 funds for a SIP of just Rs.10000 while searching for the best funds for his money which kept on changing every now and then. After 3 years of this fund switching exercise he lost all his patience and stopped all his SIP’s.

Often in my articles I have mentioned that there is nothing called a best fund and role of an advisor is not tell you the best fund. There can be only a plan that’s best for you and the role of an advisor is to help you follow the plan so that you make it to your goal in time. Now it’s up to you to decide what you want for you and your hard earned money.


SLA Financial Solutions is a Leading Advisory firm based out of Jaipur. We are amongst the top 5 Financial Advisory firm with a team of 20 + people. We have been awarded twice by CNBC as best Financial Advisor across North India.