Very simple sir - if you are able to see beyond the selling pressure seen in small and mid caps in the past 9 months, few simple facts will emerge :
a) globally and increasingly in India, mutual funds because of their large size of assets under management are underperforming the benchmarks. Basically investing in mutual funds doesnt make sense to most people, passive investing is much better but then the army of distributors and wealth managers who get paid by mutual funds will still make their HNI clients invest with them. Simply put it just doesn’t make sense to invest in any vehicle which has too much money as expected returns rapidly come down in inverse proportion to AUMs.
b) a small breed of fund managers will always beat the benchmark with such a large difference over long term due to compounding (despite higher fees) that it makes a lot of sense to invest with them. The problem is the find them but then many of fund managers are excellent sales person (and not excellent investors) and entrap the investors in HNIs through suave know-it-all demeanour and talks.
c) an HNI in many case is driven by greed particularly at the top of the cycle when he sees so many people like him minting money in the market and the fear of missing out is too strong. When porunju reports in January 2018 that 2017 has been a 70% year, it has an impact on everyone who was putting up with some safe equities or mutual funds making a paltry 15% - makes people move funds.
Bottom line is investing in pms/Aif/advisory makes a lot of sense but only when the horse you are riding on is good. If you are riding the wrong horse then it’s a bigger problem than being invested in a mutual fund where market returns are what one should expect and mediocrity is the order of the day in most cases.
Finding the right horse however is easier said than done as great sales people are seldom great investors and vice-versa in my opinion. God is rarely than unfair.