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Here is the December 2016 list of equity mutual fund lump sum and SIP returns; upside capture, downside capture and capture ratios over 1,2,3,4,5,6,7,8,9 year periods determined up to Dec. 2nd 2016.

Pranav Date  wrote a code to match the Value Research fund name and category with appropriate AMFI scheme code. This is a crucial step as it would be very difficult to manually do this for 414 equity funds.

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6

Each December, I conduct a personal finance audit. As part of this years audit, I thought of updating my mutual fund investment journey, in particular, the rise and fall of my retirement corpus.

The idea behind this post is not to boast or claim how intelligent my investing strategy is. It is only to study volatility and perhaps point out that simple solutions are enough to achieve early financial freedom.

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A mutual fund is not an LIC policy. One buys an LIC policy for 20 years to receive money-back every 5 years or so. One does not choose a mutual fund to invest for 20 years. A mutual fund is also not a stock. One need not read a balance sheet or understand the business model to select a mutual fund.

A mutual fund is a professionally managed basket of securities - stocks, bonds, cash or gold. Since each of them is market linked (daily worth = current market value), past performance does not matter and future performance is anyway unknown. Selecting the right equity mutual fund scheme is not possible!

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Here is this month's screener data of how consistent a fund has performed with respect to a category benchmark over every possible 3-year, 5-year and 7-year investment duration since 3rd April 2006. All equity funds and equity-oriented balanced funds (excluding equity savings funds) have been considered*.

The method adopted is based on this report:  A simple way to measure mutual fund performance consistency. Screener data for October 2016 can be found here.

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12

In the second part of the buying "low" vs buying "high" study, I consider return differences for identical investment amounts. And guess what? The results are most surprising!

For those who have not read the first part, I request that you head over to Equity: Buying “High” vs Buying “Low” and then come back.

Some definitions:

1 Buying low (low-SIP): Buying when index (S&P 500 and Nifty total returns indices) has a value lower than its ten-month average. This is checked only once a month - on the first.

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