Radhika Gupta, chief executive of Edelweiss Mutual Fund, told investors that the biggest threat to wealth is not a fund’s poor performance but the instinct to abandon it the moment another scheme shows better returns. She explained that the ‘return‑chasing trap’ leads many retail savers to switch funds prematurely, often locking in losses and paying unnecessary transaction costs. The behaviour is especially risky in a market where the Sensex and Nifty have been trending higher but individual fund performance can diverge sharply.
A fund that lags the benchmark for a few months may still be on a solid long‑term trajectory, yet investors fearing under‑performance may move to the latest winner, only to face another cycle of disappointment when that fund’s momentum fades. Gupta advises a disciplined approach: stick to a well‑thought‑out asset allocation, use systematic investment plans, and evaluate funds on fundamentals such as expense ratio, portfolio quality and manager track record rather than short‑term returns. Recent regulator warnings about aggressive fund switching underscore the need for greater financial literacy among Indian investors.
For the average salaried professional, resisting the urge to chase hot funds can preserve compounding benefits and improve wealth creation, particularly as the market navigates modest growth expectations amid RBI’s monetary policy stance.