Mutual funds (MFs) are run by fund managers with significant expertise and whose job it is to ensure that the fund beats the benchmark in the long run. Therefore, it might seem profitable to simply replicate a fund’s portfolio. But that’s not a great idea because in doing so, you are essentially trying to guess what a fund manager is thinking, which is an impossible task. There are other reasons too.
Funds’ objectives
Every scheme is launched with a particular objective. For instance, large-cap equity funds invest mostly in large-cap stocks. “Every MF has schemes that invest money based on their (respective) investment objectives and strategies. These objectives may not be in sync with the retail investors’ strategy,” said Vaibhav Agrawal, vice-president and head-research, Angel Broking Pvt. Ltd. A fund manager may exit the stock in a year or two while your goals might indicate you need to remain invested for five or more years.
