"In the long run, we are all dead," so said renowned economist John Maynard Keynes. However, when it comes to the world of mutual funds, I would like to rephrase that statement to: "In the long run, master the art of patience and you shall reap the benefits".
I have always been of the opinion that the term 'long run' is extremely subjective and varies in reference to tenure, depending on who is using it. In the financial advisor community, this term could be anywhere between 3-5 years and could even extend up to 15 years. And that is the reason I once again reiterate that there is no right or wrong definition. It actually depends on the goals of the investor and the duration for which he is ready to block funds for that particular investment.
A few weeks back, the Regulator came out with a statement saying that there are 9 fund houses where more than 50% of their schemes have underperformed their respective benchmarks consistently for a period of 3 years and another 9 wherein up to 50% of the schemes have underperformed their benchmarks. In this context, the opinion voiced by many experts was that investors need to exit these funds and look at the better performing peers in the respective categories. Being in the research desk of a leading distributor firm myself, investors have always posed questions regarding their investments into a particular fund and our take on the same. For instance, in the recent months there have been questions on what should be done with investments into a fund like Reliance Growth that has underperformed over the last few years. My answer has been that Reliance Growth has been in the industry for more than 15 years and has always been a good long-term bet. A dip in its performance in the last few years should be considered as short-term volatility and investors need to be patient about this investment. We are confident that Singhania and his team would make the appropriate modifications in the portfolio and will be able to