Social media has emerged as an undeniable barometer of what’s occupying investor mindspace. Even a cursory participant like me, knows that Lenskart’s Initial Public Offering (IPO) is on everyone’s mind.
A tech-driven new age company, Lenskart is an eyewear retailer. It isn’t uncommon for IPOs of new age companies to be questioned for the robustness of their business models, ability to generate profits, and rationality of valuations. To that end, Lenskart is no different.
Perhaps, what caught everyone’s eye was the magnitude of lofty valuations; also, some comments made by the founder/CEO didn’t sit well with the investor community.
Unsurprisingly, there’s been a barrage of criticism on social media. I have never seen so many memes targeting an IPO 😊
Several leading Indian fund companies have invested in the IPO. Expectedly, they have also taken stick for their decision. Fund companies will have to justify to investors, what drove them to invest in the IPO.
This is where it gets interesting: Some have used the Lenskart IPO to slam the utility of mutual funds as investment vehicles. It has been insinuated that mutual funds are tools for compromising interests of retail investors.
The message is clear: Be way of
mutual funds!
To my mind, that line of thought is both fallacious and uniformed.
Mutual funds enable retail investors to access markets, using the portfolio manager’s expertise. Indeed, the onus of selecting an apt fund lies on investors. Beyond that, the portfolio manager and his investment team are ‘first among equals’, while making investment decisions.
Not every stock in the fund portfolio will deliver, or even be apt for every investor in the fund. However, so long as the portfolio helps investors achieve their financial goals (while adhering to their risk profile), it is fine.
Furthermore, when investments fail, it shows in fund performance, opening it to investor scrutiny. Any investor who loses conviction in the portfolio manager and his process, has every right to liquidate his holding and invest elsewhere.
Don’t get me wrong: Indeed, fund companies must be held to the highest standards of probity. Also, Indian fund companies haven’t exactly covered themselves in glory when it comes to acting in investor interest.
Heck, I don’t think anyone has been more critical of the Indian mutual fund ecosystem than me.
However, running down and questioning the very utility of mutual funds as investment avenues because some fund companies invested in a questionable IPO is excessive.
#Lenskart, #IPO, #mutualfunds, #investing
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