Master And Student

What is Specialized Investment Fund (SIF) SEBI rolls out Specialized Investment Fund with Rs.10 lakh minimum investment. What is Specialized Investment Fund? This newly launched class aims to fill the space between mutual funds and PMS, offering a flexible and specialized option for investors who are willing to make riskier bets and seek higher returns. Why the Need for SIFs? Mutual funds, by nature, attract a wide range of investors and are governed by strict regulations to ensure broad accessibility and safety. They are more suitable for conservative investors or those with a lower risk appetite.   On the flip side, PMS offers tailored strategies but typically requires a significant minimum investment (Rs.50 lakhs and above) often too large for smaller investors, and with a complexity that may seem daunting for those without deep financial expertise.  This is where the SIF comes in. SIFs are designed for those who are more informed about the market, willing to take on a hig...

 Mutual fund assets surge 35% in fiscal 2024 to a new high. According to recent report from AMFI, fiscal 2024 turned out to be one of the best years for the domestic mutual funds industry as assets under management (AUM) spurted by nearly Rs 14 lakh crore to a record Rs 53.40 lakh crore as of March 2024 compared with Rs 39.42 lakh crore as of March 2023. Women comprised ~23% of the investors based on their share of the AUM and men ~77%, while individual investors comprised ~60% as against institutional investors ~40%. Equity-oriented fund categories gain on inflows and mark-to-market (MTM) gains. As Nifty 50 gained 33%, most of the AUM increase are from MTM gains. Passive funds growth was muted around 27% as compared to Active funds. Another key take away is investors' adoption of systematic investment plans (SIPs).   SIP continues to rise with monthly net inflows at Rs 19,300 crore in March 2024. For fiscal year 2024, the net inflows through SIPs stood at nearly Rs 2 lakh cro...

Historically Sensex has given returns of about 15% per year, despite volatility and price fluctuations of about -20% to +60%. The following table shows S&P BSE Sensex historical data - start  & close values and the yearly returns of the sensex from 2000 to 2024. So far during the year the   index has hit an all-time high of  75,124   and despite markets hitting all time highs not all stocks make all-time highs. There are many stocks still below their highs. Stocks like HDFC Bank, ITC, Asian paints are still well below their highs and some of them have given low returns over last 3-5 years. Individual or Retail investors can achieve consistent returns through investing via mutual funds , whether it be active or passive. Chasing returns from individual stocks is futile. Be a wise investor !

 Nifty’s Decade: 2030 Target at 50000. In its recent technical outlook report, ICICI Direct stated that it sees Nifty 50 touching the 50,000 mark by 2030-end. According to ICICI Direct's report, Indian equities are likely to display the same rhythm that the US and Nikkei did in 1990-2000 and 1980-1990, respectively, i.e. delivering a decadal move of 5x on headline indices. image source Icici A decade ago, in December 2012, the Nifty 50 ranged between 5,800 to 5,900 levels. Taking into consideration the new lifetime high of 18,887.60 which was recorded on December 1, 2022, the benchmark has skyrocketed by a huge 13,017 or 222% in a decade.  But taking into consideration December 19, 2022 level, still Nifty 50 has witnessed robust growth of 12,491 or 211% from the 5,929.60 level on December 19, 2012. Explaining the decadal cycle, ICICI Direct revealed that since its inception in 1979, the Sensex gained an average of 4x in each decade. From the CY20 close of 13981 (Nifty) similar...

We all know and struggle with procrastination, particularly starting our investing journey. Many of us know that it’s the best way for us to achieve our financial goals, but yet we still put off making our first investment. A major reason we put off investing is because we’re "afraid of losing money." This is known as "loss aversion", a cognitive bias in which we tend to prefer avoiding losses, even if it will give substantial profits in the future. How you can overcome it? Change your thoughts about investing from “I’m afraid of losing money” to “I will definitely make money”.  This small shift in your mindset, can help you get over your inertia in investing. It may have been a difficult first step to make, but once you do it, you’ll not regret starting your investing journey. Do it now!

The National Stock Exchange (NSE) through its GIFT City arm in the International Financial Services Centre (IFSC) has brought in new facilities that will enable investors to buy and sell US Stocks.  The NSE International Exchange, which is a wholly-owned subsidiary of the NSE India announced that US Stocks would be available for trade and delivery. This means that Indian investors can now buy and sell stocks in companies like Tesla, Apple, Google, Microsoft and other prominently listed US entities. The offerings will be in the form of unsponsored depository receipts. The product enables resident individuals to easily and cost effectively invest in US stocks under the LRS framework of RBI (which permits the resident individuals to remit up to USD 2,50,000 per financial year. Here are some of the details available about NSE IFSC. How many stocks would be available? About 50 stocks are to be made available for trading and investing from both New York and Nasdaq stock exchanges. The st...

The S&P BSE Sensex hits 50,000 ! The BSE SENSEX (also known as the S&P Bombay Stock Exchange Sensitive Index or simply the SENSEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.   The base value of the SENSEX was taken as 100 on 1 April 1979 and its base year as 1978–79. The journey from April 1, 1979, when the index was technically born, is dotted with many milestones. The BSE barometer has come a long way. With a compounded annual growth rate (CAGR) of over 15 per cent, the equity gauge remains by far the most promising asset in India.  The 30 constituent companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy. Published since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India.  It closed at 549 when launched on Jan 1, 1986. Toda...

 Here is the Comparison of Physical gold, Gold ETF and Sovereign Gold Bond. Know more about Sovereign Gold Bonds Upcoming Sovereign Gold Bond issues:

Difference between Tracking Error and Tracking Difference in Index Funds and Exchange Traded Funds (ETFs). As we all know, an index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Nifty 50 Index. What Is Tracking Difference?  How do you know whether the index fund or the ETF is tracking the index correctly?  In other words, we want to know whether the index fund is delivering the same returns of its benchmark index. Index Fund returns are always compared with Total Returns Index of the benchmark index. In our case, Nifty 50 index fund has to be compared with Nifty 50 Total Returns Index. Check the image below. Assume the Nifty 50 TRI went up 10% in 1 year, the Index fund has given 9.8% as its returns, the tracking difference is 0.2% Tracking difference is the discrepancy between Index Fund/ ETF performance and index performance. The tracking difference is rarely ...

Sovereign Gold Bonds - A smarter way to buy gold.  What is Sovereign Gold Bond (SGB)?   SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. The bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.    Why should I buy SGB rather than physical gold? What are the benefits? The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form.    The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form.  Photo by Michael Steinberg from Pexels   Who can buy?   Any Indian resident – individuals, Tru...

Do Index Funds and Exchange Traded Funds pay dividends? Before we get into the details, you should know about Benchmark and Total Returns Index. What is a Benchmark? A benchmark is a group of securities which are considered as a 'benchmark' to measure a fund's performance. Benchmarks are generally broad market indices like BSE Sensex 30, NSE Nifty 50, with which mutual fund returns are compared with. In case of index funds or ETFs, say a Nifty 50 Index Fund, the Index Fund is expected to give the returns of Nifty 50 index's performance less the expenses incurred by the fund. For e.g, If Nifty 50 returns 10% per year, the Nifty 50 Index Fund is expected give the same returns of 10%.   Total Returns Index. The Nifty 50 index has India's top 50 companies and every year these companies declare dividends.  Nifty Total Returns Index, is nothing but Nifty plus the total dividends announced by Nifty companies, which are assumed to be reinvested. Every year the about 1.5...

Asset Allocation 101 Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, gold and cash. The asset allocation that works best for you will depend largely on your return objectives, time horizon and risk tolerance. Why Asset Allocation is So Important?  By including asset categories with investment returns that move up and down under different market conditions within a portfolio, an investor can protect against significant losses.  Check the image below. Over the last 20 fiscal years equities, debt & gold have outperformed each other at different times and no single asset class continues to outperform or underperform.    Image Source HDFC The Connection Between Asset Allocation and Diversification. Diversification is a strategy that can be neatly summed up by the timeless adage, “don’t put all your eggs in one basket.” The strategy involves spreading your money among various investments in the hope th...

SIP Top Ups. A Systematic Investment Plan (SIP) is an effective wealth-building tool. By contributing a fixed amount every month, the plan helps you accumulate wealth over the long term. But as your circumstances change and your income grows, you are likely to have more money available to invest. A SIP Top Up allows you to increase the monthly investment amount periodically. SIP top ups can be specified as a percentage or a fixed amount every year. Illustration: Intended investment period: 10 years. Investment amount: Rs. 10,000. Expected Rate of return: 12% Frequency of SIP investment: Monthly. Amount of incremental investment: Rs.1000/month annual increment. SIP  investment of Rs.12 Lakhs, without top-up  becomes Rs.22.4 Lakhs, whereas a Top-up SIP investment of Rs,17.4 Lakhs becomes Rs. 30.43 Lakhs. That's a huge difference of about Rs.8 Lakhs. Here is a graphical representation of the performance of these two strategies: Why Top up? Top-ups hel...

Factor-based index strategies combine the benefits of both active and passive investment styles. They use well established stock-specific factors used in active investment and rules based frame work of passive investment. Factor based investing has come a long-way after the first factor-based ETF got introduced way back in 2003. There are 1,200+ factor-based equity ETFs/ETPs listed globally with total assets under management of US$534 billion offered by around 150 asset managers. There are single-factor indices and multi-factor indices. The most popular factors which are typically used to capture long term risk premium across the globe include Alpha, Quality, Value, Low-Volatility amongst others. Single-factor based index strategies, however, typically exhibit cyclicality and may underperform during certain market phases. An alternative smart beta index strategy is to select stocks based on combination of multiple factors, targeting to counter the impact of cyclicality o...

Nifty above 14,000 ! Surprised ? The Nifty Total Returns Index , is nothing but Nifty plus the total dividends announced by Nifty companies, which are assumed to be reinvested. Though not many are interested in dividends and are concerned about only in the rise in share prices, this is a surprise for them. The Total Returns Index is currently above 14,000,  while the Nifty is around 10,300. What exactly is Total Returns Index? The total returns includes interest, capital gains and dividends realized over a given period of time.  The TRI will help in giving the right picture of the real alpha, a metric which measures what the fund has earned over and above (or below) what was expected. What does TRI mean for mutual fund investors? Currently, majority of fund houses benchmark their equity mutual fund schemes against simple price indices. But  recently, DSP BlackRock announced it would be disclosing the performance of its equity mutual fu...

Nippon India Liquid Bees ETF features: Nippon India Liquid Bees ETF is an exchange-traded fund (ETF) that invests in calls, Treasury Bills and other short-term fixed-income securities. The minimum lot is 1 with a face value of Rs 1,000. NAV - Rs 1,000. Dividends are declared daily, and all of these dividend units are added together and credited to Dmat account, once a month. Listed at NSE - Symbol – LIQUIDBEES and BSE Code – 590096 Charges - All the charges applicable as with delivery trades, except for STT, which is waived. Why invest in Liquid Bees? Investors or Traders having excess funds, which they don't require immediately,  can park their funds in this fund for short-term.  You can also use them for paying margins to brokers,  which allows you to earn money on your margin, unlike cash  - which gives no returns. Expected Returns? The returns expected is about 5-5.5% per annum. If you buy and hold your units in Demat account, you ...

Mutual Funds vs Stocks: Just like any other financial instrument, mutual funds are not without risk. When defined in terms of chances of losing money, the risk in mutual funds is no different than investing in stocks. Still they are relatively safer and a more convenient way of investing. What advantages do mutual funds offer over equity stocks? Here are a few considerations : Diversification. If you have only 1,000 to 5,000 to invest, the money will not buy many shares of a single stock.  By investing in only few stocks, one of them may not perform well. This in-turn affects your portfolio performance. Instead, when you invest similar amount in a mutual fund, your fund's portfolio may have 50 to 100 stocks. If one or two stocks doesn't perform well, your portfolio is less affected, because other stocks in the portfolio may perform well. Professional Management. Managers of stock mutual funds have instant access to information about every stock in their p...

Inverse Mutual Funds. We all know about regular mutual funds, but what is inverse mutual funds? They are a special type of funds in which their value goes up when the stock market comes down . They are nothing but “short funds” or funds having short positions of the index or stocks . By investing in this fund investors/traders can take advantage of fall in the markets . The main objective of the inverse mutual fund is to provide investors with an alternative during market-decline and in the case where they cannot short sell the index. This type of fund is generally linked to the market index such as the S&P 500 or any other benchmark index. The value of such funds change similar to the traditional funds, on a daily basis, say if the index declines by 1 percent in a day, the fund value increases by 1 percent for that day. In what other ways these funds differ from  traditional funds? While a traditional mutual fund purchases shares of index or stocks, which is ...

Bharat 22 ETF: Overview. The ' Bharat 22 ' Exchange Traded Fund (ETF) , comprising 22 scrips of public sector units, is open for retail investors from November 15 to November 17.  The state-owned companies or PSUs that are part of the new ETF are ONGC, IOC, SBI, BPCL, Coal India and Nalco. The other Central Public Sector Enterprises on the list are Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL and NLC India. It also includes government's strategic holding in Axis Bank, ITC and L&T held through SUUTI (Specified Undertaking of Unit Trust of India). About Exchange Traded Funds (ETFs): Exchange Traded Funds are defined as marketable securities that track a specific commodity, bonds, index or a combination of assets such as index fund. ETFs can be traded on stock markets similar to shares thus ETF units witness price change in real time. Features of the Bharat 22 ETF: Large Cap Orientation: The 22 company securities held by the...

Are Mutual Funds better than stocks?  That's the one key question comes to everyone's mind who wants to invest in stock markets! Let's look at different aspects of investing in mutual funds  and  investing in stocks directly, and then come to a conclusion. How safe are Mutual Funds? Just like any other financial instrument, mutual funds are not without risk. When defined in terms of chances of losing money, the risk in mutual funds is no different than that present in other financial instruments. Still they are relatively safer and a more convenient way on investing. In mutual funds, you can control risk by choosing a fund that suits your risk profile. On the other hand, picking stocks individually that will both meet your objectives and match your profile can be tough. What advantages do mutual funds offer over equity stocks? Here are a few considerations : Systematic Investment Plan : Small sums (starting from Rs 500) of money can be invested monthly ...