Thursday, May 1, 2008

Mutual Fund better then stock market

Call it "Power of huge money" or the "power of scale" or the "power of size" is so immense that the odds of beating them is heavily against us.

If a retail investor has just few lakhs rupees at his disposal. He just cannot afford to have analyst who can go and meet a companies management, there distribution network at the grassroot level, there clients, there auditors. But say a big Fund house can spend even a fraction of there AUM (Asset Under Management) to study the actual working of the company. (e.g Reliance Growth Fund currently has AUM of over 5,000 Crores, for them even spending 1% of this on research will work out to 50 crores). I am not talking about the things like people can bribe the insiders of company for inside reports etc.

Can any individual spend 50 CRORES just on research ? Well most of us maybe not.

So I would rather be a part of this huge giants of the financial world rather then fight against them.

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