She posted on social media platform X, “It is pointless trying to invest in the #1 fund because #1 changes very fast. Sorting by top returns isn’t an investment strategy. Consistency matters much more.”
Gupta mentioned that many research reports have shown data that proves it is pointless trying to invest in the top fund.
According to Gupta, websites continue to rank mutual funds by best discrete returns and not by rolling returns which measures consistency. Every mutual fund house knows that if their scheme ranks 1, they will receive huge inflows, which will come on the back of unrealistic expectations.
“Yet websites continue to rank by best discrete returns (not rolling returns which measure consistency). Every AMC knows if their scheme ranks 1, they will get a rush of money, which will come on the back of unrealistic expectations,” posted the CEO.
It is pointless trying to invest in the #1 fund because #1 changes very fast. Sorting by top returns isn’t an investment strategy. Consistency matters much more.
Many research reports have shown data that proves this first line. Again and again. Thanks @FundsIndia for… https://t.co/1mkGL2lRNy
— Radhika Gupta (@iRadhikaGupta) August 25, 2024
This came in response after CA Abhishek Murarka, wealth manager at Angel One Wealth posted about a report by Arun Kumar of FundsIndia. Murarka mentioned that the top-ranked mutual fund scheme in 2018 -2020 is now ranked at 190 rank for 2021-now. The scheme at rank 2 is now 192.
He also added that the top-ranked scheme for 2021-now was at 160 rank in 2018-2020. This shows that things change. One cannot invest looking backward.
The top ranked Mutual Fund scheme in 2018-2020 is ranked 190th for 2021-now. The rank 2 is now 192.
The top ranked scheme for 2021-now was at 160th ranking in 2018-2020.
You see – things change, you cannot invest looking backwards.
Source: FundsIndia report by @arun_kumar_r
— CA Abhishek Murarka 💹🐂 (@abhymurarka) August 24, 2024
The report by FundsIndia mentioned that despite Indian equity markets having intra-year declines every year, 35 out of 44 years ended with positive returns.
