People usually do not buy good investment products, but buy stories and packaging. If the provider says “it is a good equity fund” it may not attract people. If they say “it is an equity fund run on a proprietary model back-tested for adverse market conditions with an objective of generating superior alpha” it sounds attractive. Since a market has been created by people, expecting stories and taglines, manufacturers have come forward to fulfil that space.
Product pitch
The product collaterals — brochures, pamphlets, presentations, etc., are prepared to market / sell the product. Nothing wrong with that. In financial products floated by entities regulated by Securities and Exchange Board of India (Sebi), for instance, mutual funds, every product is approved by Sebi prior to launch. Hence, marketing collaterals can mention only approved features.
Features mentioned in marketing materials do exist in the product. What is important for you is to understand whether you require it, whether it is suitable for you. You should not invest in a financial product just because the features are attractive
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When an insurance company launches a single premium product that grows to seven times of the initial investment amount in 30 years, it looks attractive. To understand this, you have to calculate the compound annualised rate of return that makes it grow seven times the principal amount. When this product was launched, the rate of return available on 30-year maturity government security (government bond) was higher. This will not be mentioned in the marketing materials, that an instrument with a higher degree of safety (government bonds vis-à-vis insurance companies) is offering a higher return.
Current scenario
The market
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