Mutual Funds in Volatile Markets

The past 3 months at the stock market have been very volatile to say the least. At times like this can we trust the experts to conjure up a decent rate of return for us? Let say instead of investing in the equities directly and we hand over this task over to the experts i.e. invest in a Mutual Fund, to be specific an Equity Diversified Fund (EDF).

Analysis shows this may not be a good idea after all. Almost none of the EDF have given positive returns, at times when a common man would have found the going tough in the markets. Only one EDF, Reliance Regular Savings Fund has given a return of about 7.5%. The performance of some of the Gold Funds has been better, with some of them giving up to 18% returns. One may choose selectively going further then.

Meanwhile in a panel of speakers hosted by the The Economic Times, Tata Mutual MD Ved Prakash Chaturvedi is of the opinion that the market will be at 18000 levels on December 31, 2008. But still feels the mutual fund managers can beat that and deliver positive returns for the investors.

Here’s a light excerpt from one of the related articles.

After Albert Einstein died and reached the gates of heaven, St Peter asked him to temporarily share lodgings with three others till he was alloted space. St Peter introduced the room-mates by their IQ levels. As two of them had IQs of over 200, Einstein decided to discuss his theory of relativity and global warming. St Peter then pointed to the third person and apologetically said he had an IQ of just 60. “No problem,” said Einstein, “We can discuss where the stock market is headed.”

DISCLOSURE: All investments are subject to markets risks and should only be done after through consultation with a registered financial planner.