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81. Explain the term Marking -To- Market (MTM).
One of the key concepts in Mutual Fund Industry is Marking-to-Market (MTM) with regard to the communication to the investors . MTM, which propagates that all the position of the Funds are shown at the current value of portfolio on real-time basis, is a great piece of innovation when this comes to the performance evaluation of Funds on MTM basis, it has created a huge mess in the system .The issue is that MTM is not letting Fund Managers take a long-term view. Investors are measuring performance evaluation of Funds on MTM basis, it has created a huge mess in the system. The issue is that MTM is not letting Fund Managers take a long-term view. Investors are measuring performance of the Funds on a day-to-day and moment -to-moment basis .There is need to change their perspective on the subject and understand the risk and return profiles very clearly. Accordingly , there is an urgent need of honest communication between the industry players and their customers i.e., investors.
Ans: One of the key concepts in Mutual Fund Industry is Marking -to- Market (MTM) with regard to the communication to the investors . MTM, which propagates that all the positions of the Funds are shown at the current value of portfolio on real-time basis, is a great piece of innovation when this comes to risk Management.