Skin in the game matters: Samir Arora suggests investors to question fund managers on personal exposure

Synopsis

Helios Capital’s Samir Arora urged investors to question fund managers, AMCs, and brokers about their personal stakes in recommended strategies, stressing the need for transparency, accountability, and “skin in the game” in investment decisions. For traders, the same principle applies and they should ask their broker- how much of his personal wealth he is hedging via weekly options and futures.

Underscoring the importance of transparency and fairplay on the part of fund managers and brokers, Samir Arora, founder and fund manager at Helios Capital Management, has advised investors to ask the right questions before making a money move.

Arora urged investors to ask asset management companies (AMCs) or their fund managers when did they last invest in their fund/strategy and what percentage of their net worth is invested in the schemes they are recommending.

“You should ask an AMC or its fund managers when did they last invest in their fund/strategy, how much % of their net worth is invested in whatever they/he is recommending etc.,” Arora said in a tweet.

The same applies to the fund managers as well. “Similarly you can ask a wealth manager who recommends (say) a new fund/strategy etc.- what is his personal exposure,” the tweet said further.

For traders, the same principle applies, he added. “You can also ask a broker- how much of his personal wealth he is hedging via weekly options and futures etc,” the Helios founder.

In the investment parlance, this is called ‘skin in the game’. Market regulator Securities and Exchange Board of India (Sebi) has rules governing this aspect.

In March, the regulator relaxed the 'skin in the game' requirements for mutual funds, allowing employees of the Asset Management Companies (AMCs) a slab-wise contribution into the schemes in which they have a role. The revised rules became effective from April 1, 2025.

The previous mandate required designated employees to get 20% of their remuneration in the units of their mutual funds, to ensure that their interests are aligned with the unitholders.

Read more: Sebi relaxes 'skin in the game' rules for mutual fund managers, allows slab-wise contribution

Arora is quite active on Twitter and puts across his opinion on stock markets and investment related subjects.

He recently weighed in on the H-1B visa issue, suggesting that while US President Donald Trump’s executive order may have only a limited impact of 5% or less on Indian IT companies, firms should not dismiss it outright. Instead, he advised tech players to communicate clearly how they plan to address the perceived threat rather than brushing it off as inconsequential.

Read more: H1-B visa hit may not be more than 5% but Indian IT firms must address US policy impact openly: Samir Arora

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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