The proof of the pudding is in the eating is a age old adage which is said to mean that you can only judge the quality of something after you have tried, used, or experienced it.
In the financial industry, one key thought process is the concept of “Skin in the Game”. If I were to advise you to buy a certain product, the least I am expected to do is risking something of my own in the same product.
Mint today reported that Kotak Mahindra mutual fund staff told to invest in-house. The concept in itself is not new with the same being practiced in US for quite a while (see pic below) while PPFAS was one of the first to explictly showcase the skin in the game concept out here in India.
We believe this is a very welcome move. While it may not mean that Kotak funds will move to the top of the bracket, at the very least, one hopes that pressure from employees will have some impact and ensure that their funds are not bottom scrapers in their respective segment (Kotak’s funds fall mid way in terms of 5 year performance)
Performance of Kotak funds (data from mutualfundsindia.com);
