Fund Management at B-Schools - II

This is part II of the article Fund Management at B-Schools – I. Please read the article from the first part before continuing with this one

But I cannot stop myself from adding a note of caution :- ) (As always)

When the entire market and country is going euphoric about the stock markets, Sensex and Nifty touching record highs each day consistently, then it is easy to garner positive returns.

There are few things that one should keep in mind:

• The article mentions that the funds are being mentored by seniors, alumni and professors of the institute. Are the student fund managers learning the facts about how to compare the returns against the market index and see how they have performed?
• Are the student managers able to understand the fundamentals of stock picking? (though, in my opinion, there are no such stock picking fundamentals :- )
• Can they see whether their fund returns are atleast comparable to the returns offered by respective ETFs?
• As of today, the funds are working as small entities with small amounts. Are the future fund managers learning that there will be a big amount of money if they have to manage a fund professionally (Like Reliance MF has assets worth 70,000 Crore Rs.)
• I believe (though I may be wrong) that legal aspects of MF investments may not be covered in these small college based unregistered funds. Though these will be covered once the student fund managers join the professional fund management organizations
• They are in the process of getting the funds registered. I believe that is a very good move – it will ensure that the legal requirements as well as practical problems in a registered regulated fund will then help the student fund managers to get a practical understanding of the money management
• Most Important of all – are the professors, along with other mentors, informing the students about the efficiency of the markets and other available financial instruments like ETFs and Index funds?

I hope to see these small funds growing big, registered and regulated. But I will not be happy if the registered student funds start collecting money from common man. It will then defeat the purpose of fund management learning.

To all student fund managers, kudos to you all and keep up the spirit – just make sure that you keep your learning practices to your own money (of yourself, your alumni and fellow students).

Have questions, please read the comments and post your views and queries in the comments section which helps in open discussion and avoids duplicity of questions.

You may be interested in reading my previous articles. Here is the link to Table of Contents in a chronological order.