Posted On Thursday, Sep 05, 2019
Gandhiji epitomised honesty and transparency. Each time we put Gandhiji behind us as a historical icon and his teachings as relics of the past, we set ourselves up for a surprise and sometimes even a shock. Gandhiji believed that the first step towards harbouring long-term relationships that were fair and treated everyone as an equal were to live one’s life with the utmost honesty and transparency. He himself lived his life like an open book and exemplified the practice of honesty and transparency.
Through his writings, especially his autobiography My Experiments with Truth, with great candour, Gandhiji disclosed his shortcomings, his weaknesses, and his vulnerability like any other ordinary human being. He neither chose to lie nor sugar coat his various shortcomings. The people of the country got to see him as he truly was and not as a trumped up version of some idealistic man.
Gandhiji’s honesty and transparency were beyond question. He held the belief that leadership starts from the very virtue of ‘honesty’. Honesty automatically leads to transparency as an honest leader has nothing to hide from anyone.
Be True to Label
In the investment world, it is integral that you get to see ie. the funds are “True to Label”. An investors investment decisions hinge upon what the fund management community tells them about the fund and how they manage the investments. Lack of transparency in this sphere can be detrimental to the health of an investor’s portfolio. Investors make portfolio decisions basis three important metrics:
1. Their Return Requirement
2. Their Risk Profile
3. The Investment Time Horizon
These factors are largely dictated by an individual’s goals. Thus, an alignment between the above three factors and the investment portfolio is integral to the investor achieving his/her financial goals.
Transparency in the Investment Process: Most fund houses follow an investment process that is key to them selecting stocks that can generate good returns. While every fund house will have a customised investment process, broadly most fund houses will include in-depth research, approval by investment committee and regulatory compliance in their investment process. It is imperative that the investment process is transparent and that there is no opacity in the way investments are chosen. Each step of the investment process should be known by the people involved in the decision making and clear to all stakeholders. The investment process should be sacrosanct and followed meticulously by all fund managers. This ensures that the overall goal of making the most optimal portfolio decisions is maintained by the fund houses.
Transparency in Communication: Every fund house is driven by a certain investment philosophy. This forms the bedrock of all the investment decisions and guides the fund managers in making the optimal investment choice. For example: some funds have a value approach where they prefer to invest in stocks that are available at compelling valuations. The investment philosophy can have overlays of themes that can help fund managers capitalise upon the various opportunities in the market. When one invests in a particular fund, the underlying assumption is that the sanctity of the investment philosophy communicated by the fund is maintained.
Being true to label is delivering on your promise to investors. Let the rule of “caveat emptor” no longer apply and let the onus fall upon fund houses to be transparent and honest in all their communication and dealings with the investors. As Gandhiji said, “a true leader has nothing to hide”.
Disclaimer, Statutory Details & Risk Factors:
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – https://www.quantumamc.com/disclaimer to read scheme specific risk factors.
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