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History Repeating Itself

posted on 13 October 2014 by Sunil Jhaveri

Once again history is repeating itself. After a huge rally in equity markets, MF Industry is recommending investments in asset class called MIPs (including cover page article in ET Wealth dated October 13-19’2014 & in ET dated October 13, 2014). I do not have any objection to MIP as an asset class (I am actually an advocate of this asset class – as many IFAs who have attended my workshops would have realized); but have an objection to timing of these recommendations and articles & it’s positioning.  Those who have been in the industry long enough will relate to what I am about to write: Till 2003 Income schemes were sold as safe havens as RBI was cutting interest rates & Fund Managers were increasing duration of these schemes & generating double digit returns. However, interest rates started inching up from 2003 to 2004 (when benchmark yield after touching a low of 5% levels started rising & touched a high of 7% by end 2004).