The main rationale behind maintaining stock portfolio as against MF portfolio is , to exploit the advantages we have over fund managers and fund houses and avoid the disadvantages.
Just to give you some thought –
- i can buy anytime even when no one is buying but Fund manager is restricted by fund flows
- I can sell anytime even when everybody is buying. Fund managers have to honour the redemption pressure.
- i can keep invested for months and years even if portfolio returns are negative and wait for considerable time for upturn…but fund managers are compelled to take rash decisions every week and month to show the performance . They are under lots of pressure of performance. I have no pressure as i am.earning through my active profession, so even if i lose 100% of my portfolio, still i can sleep peacfully with full stomach.
- I can take advantages of peculiar situation in these index stocks periodically by investing in them at some weak points, individually. I wont be able to do that under MFs. Its under the control of Fund managers.
- the only point where they score over me is, they have a system and team.of stock analysts who are doing research for 24 hours as active profession. I can be no match for their power.
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