Moneycontrol
Last Updated : Oct 12, 2018 08:01 PM IST | Source: Moneycontrol.com

Kotak's Nilesh Shah rubbishes Andy Mukherjee's criticism of fund managers for poor performance

Shah, in a tweet on October 12 said the opinion piece by Mukherjee published in Bloomberg Quint was twisting facts and making assumptions

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Nilesh Shah, Managing Director of Kotak Mahindra Mutual Fund, criticised an opinion piece by Andy Mukherjee that said fund managers were responsible for the under-performance by most of the mutual funds this year.

Shah, in a tweet on October 12, said the opinion piece by Mukherjee was twisting facts and making assumptions.

Mukherjee, in the piece, compares the returns of 416 equity mutual funds against the benchmark indices. “Out of 416 open-ended, onshore equity funds, 401 have lost money this year….Most mutual funds are down – many of them 20 percent to 40 percent in a flat market,” he wrote.

“Do you know [the] concept of benchmarking? Should you compare a fund performance on an absolute basis or relative basis?” Shah asked in a reply to the opinion piece.

Shah’s logic is that one cannot measure every fund with the same benchmark. True, the Sensex and Nifty have largely been flat this year — the 50-share Nifty is down by 0.55 percent while the 30-share Sensex is up by a meagre 1.99 percent YTD.

However, mid-cap or small-cap indices, which many funds follow as their benchmark, have fared worse. The S&P BSE MidCap has tanked about 20 percent YTD. Similarly, S&P BSE SmallCap has plunged over 26 percent in 2018.

S&P BSE 500 and S&P BSE 100, both of which include a large number of companies, and are used by a number of multi-cap funds as their benchmark have also slipped YTD.

Mukherjee criticises fund managers across asset management companies for performing badly. At present, about $12 billion out of $98 billion parked with open-ended stock funds is underwater by more than 20 percent, he argues.

He says since May 2014, investors have put more money into equity funds than they have pulled out in every month except one, but wonders how long will it sustain. “Nobody knows just where the limit for investors’ patience lies, but it can’t be very far,” he adds.
First Published on Oct 12, 2018 06:32 pm
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