Some key points written by parag parikh on mutual fund industry
- This industry was created to channel the savings of a vast number of small investors into the capital markets.
- The main crux is long term investment but most of the funds are open - ended.
- The paradox is that..

On the one hand it talks about a long term investment philosophy but on the other hand it does not encourage investors to be a long term player.
- Money comes when the market climb and fund managers are pressured to invest in a rising market at inflated asset prices.

- However, when the market falls the net asset values falls and the investors pull out forcing managers to sell the portfolio at depressed prices to meet the redemption.
- Fund managers are forced to act in a way that does not conform with the basic investment principles. Their

Decisions are being controlled by the environment.

Solution
- Open-ended mutual funds are the main cause of the volatility in the markets today. Close ended funds are the best vehicles for a long term investor. It allows funds managers to be disciplined.

End of thread