Investing.com — Indian mutual funds should focus more on managing investor expectations rather than just chasing returns. Fund houses often overlook how retail investors react to market ups and downs, which affects long-term performance.
Retail investors expect mutual funds to deliver strong returns when markets rise but also protect them when markets fall, Bernstein analyst said. The gap between expectations and reality can create challenges for fund managers, leading to short-term decision-making and higher redemptions during downturns.
Bernstein compares mutual fund houses to banks. Just as lenders carefully manage depositor money, asset managers should pay more attention to the stability and quality of their investor base. A loyal and well-informed investor pool can help fund managers stick to their strategies without worrying about sudden withdrawals.
Mutual funds can differentiate themselves by clearly explaining their investment approach to investors. Bernstein pointed to examples of funds that have grown rapidly by aligning their messaging with investor expectations.
“We rate HDFC AMC as Outperform and Nippon AMC as Market-Perform,” analyst at Bernstein wrote.
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