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MUTUAL FUND MANAGER

 
 


Though he plays a key role in the way your mutual fund is run, several other factors also have a bearing on your returns.
 
When you buy a mutual fund scheme, do you go by the repu tation of the fund house or the individual who is managing the fund?
Which of the two is more important? Opinion is divided on this. Some feel that a scheme's performance depends more on the processes and broader philoso phy of the fund house than an in dividual's investment strate gy. They argue that mutual funds are managed by teams, not individuals. It's true that fund houses have teams of analysts, who track different sectors and companies and pro vide regular inputs to fund managers.

These analysts mine sound investment ideas and provide a list of stocks that conform to the fund's mandate as well as the fund house crite ria.Besides, a manager's actions must be in sync with the processes and core philosophy of the fund house. These in-house processes lay down strict guidelines on portfolio construction, stock selection, portfolio turnover and risk control. Since these are independent of indi viduals, the exit of a particular star fund manager has very little bearing on the fund's continued success. A process-centric fund house gives limited freedom to the fund manager.

Many investors believe that a fund manager has a magic wand, which will ensure good returns at all times. They are disappointed when the returns are poor, irrespective of the performance of the broader market. A fund manager's objective is straightforward--outperform the scheme's benchmark index. "The top priority as a fund manager is to generate alpha (returns higher than that of the benchmark) for investors. This is achieved through better stock selection and portfolio construction," says Sankaran Naren, CIO, equity, ICICI Prudential Mutual Fund. So, if the fund manager is managing a large-cap oriented fund, he will aim to beat the Nifty or the BSE-100. He does this by astute stock selection, deft market timing and prudent weightage to individual stocks and sectors within the index.

However, this only helps mirror the index returns, not beat it. To trump the benchmark, the fund must deviate from it.But the fund manager must also stick to the fund's stated mandate, which limits his ability to manoeuvre the portfolio. Regulatory restrictions and fund house rules place their own restrictions

Best Tax Saver Mutual Funds 2016 or ELSS Mutual Funds for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

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