Choosing the ideal investment advisor

Why do you really need an investment advisor?

Let’s talk about mutual funds.

In the era of ET Money, PayTM where you can invest on the go with a single click, do you really need a piece of expert advice?

No, you don’t unless you are willing to carry out research on your own of at least 2500+ mutual fund schemes offered by 44 fund houses in India.

An ideal investment advisor won’t recommend a mutual fund scheme just because he has the distribution license with him or which earns him the highest commission. An investment advisor should have carried out a full-fledged research showing the rationale to invest in the scheme.

Anyway, you should always ask your investment advisor about his research in terms of:

Legacy of the mutual fund company
Background, history of the fund manager
Objectives of the mutual fund scheme
The risk profile of the mutual fund scheme (Always remember – you can control the risk but not the returns)
Returns of the mutual fund the scheme in various timeframe including bull and bear market
Portfolio allocation of the mutual fund scheme regarding whether the fund manager has appropriate sector allocation including global allocation cash and arbitrage (riskless profit) profile
Sharpe ratio – excess return per unit of risk (this is compared with the return given by the sensex and the other mutual fund schemes), higher the better
Alpha – returns generated in excess of the market return, higher the better
Beta – showing the change in scheme return vis-à-vis change in market return, lower the better
Portfolio turnover ratio – buying and selling frequency of the securities, lower the better

Hope this suffice your need to choose an ideal investment advisor, as this is directly related to the achievement of your goals the sole purpose behind the investment…

Wish you good luck and happy investing!

With respect,
Aaditya Chhajed
CA, CFA(US) All Levels Cleared, MCom

E: chhajedaaditya@gmail.com
M: +91-9404055222.

Aaditya is the founder of Aaditya Chhajed Financial Advisory Services, a financial planning and wealth management firm in Pune.

He loves helping family, friends, and, clients make better financial decisions. He believes learning is perpetual.

He loves reading books, traveling around the world.

He is a commerce postgraduate and Chartered Accountant. He has also cleared all levels of CFA(US) in the first attempt.

Disclaimer:
Investors should seek the advice of their financial advisor prior to making any investment decision based on this report or for any necessary explanation of its contents. Future estimates mentioned herein are personal opinions and views of the author. This post is not a recommendation to buy or hold or sell securities. Investments are subject to market risks. Please read all scheme related documents carefully.

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Aaditya Chhajed, CA, CFA

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