Ethics of the fund house
How one can make use of mutual funds especially for equity investment strategy when there is a question on the ethics of the AMCs and their trustees.
During COVID-19, we started facing severe liquidity crunch in debt market which resulted in winding up of 6 credit risk oriented schemes of Franklin Fiasco. On the other hand this crisis has raised a question on the ethics of AMCs and their trustees. Some of the leading AMCs have silently transferred their low rated papers under some other schemes like Hybrid funds category. This is where an investor needs to be careful. While investing, investor would have seen high quality papers but now the situation is changed.
So when there is question on the ethics of fund houses and trustees, Index funds come into the picture. Index funds are passively managed and it mimics the benchmark. Since it mimics the benchmark investor gets full control on their investments. Regarding debt investments it is better to limit your investments to liquid funds. In my personal opinion, flexi deposits are better than liquid funds as the capital safety is very important in the current situation.
