Futures and options trading on Nifty Next 50 commenced on April 24, 2024. Will this impact the index and, therefore, its passive investors (via index funds and ETFs) in any way? In particular, how will F&O trading impact the volatility and liquidity of the underlying index (or its constituent stocks in the spot market)? The…

Many investors assume that the lower the passive fund fee or tracking error, the higher the return. This is not always true. We dispel these notions using material for a talk we are preparing for. 1. ETF tracking errors published are non-representative.  All tracking errors are highly non-intuitive and hard for normal investors to appreciate….

This article presents an outperformance consistency report of active mutual funds. This analysis was done for a SEBI-sponsored talk given to Tamil Nadu Investors Association Members on March 24th, 2024. Disclaimer: Fund performance reports present return and risk analysis of a fund with representative benchmarks and not investment recommendations. It must be expressly understood that the data…

A reader says, “Dear Sir, you have convinced us with clear data that most active funds cannot beat the index and that index funds are the way to eliminate high fees and fund manager risk. However, does this mean index investing is risk-free? Are there any risks with index investing? Kindly elaborate with an article”….

Many investors seem to believe their long-term goal planning is done if they choose an index fund or two! Unfortunately, an index fund is just a product. Choosing a product without due process won’t get us anywhere unless we ride on luck. The first step is always when we need the money and how we…

A few years ago, when the NSE introduced factor indices, aka smart-beta investing, I was among the first to get excited and wrote a slew of articles such as these: (1) Are Nifty Smart Beta (strategic) Indices better than the Nifty Next 50? (2) Picking Stocks With Low Volatility: A simple but effective strategy? (3)…

My son recently won Rs. 2500 in an olympiad contest. I asked him what he wanted to do, and he replied without hesitation, “Let’s invest it!” Many of you might think that the apple has not fallen far from the tree, but sadly that is not true. I never won any prizes in school, and…

A viewer on the freefincal YouTube channel asks, “Is tracking difference better than tracking error to evaluate passive funds?” What is a tracking difference? This is the fund return minus the benchmark total return over a period. This will typically be a small negative number as the fund return will always (well, typically!) be lower…

In this article, SEBI-registered flat fee-only investment advisor, Swapnil Kendhe, addresses common misconceptions about index investing that passive investors should ignore. About the author: Swapnil is a SEBI Registered Investment Advisor and is one of the sought-after advisors on the freefincal fee-only financial planners’ list. You can learn more about him and his service via…

In this article, Atul explains why index investing killed his passion for investing. Atul has an MBA in finance and has worked in different financial and banking establishments over the last 15 years. Over the last 12-13 years, my approach to investing has been pretty much the same. I was intensely passionate about it. I…

On April 12th 2023, The Business Standard reported the Nifty criteria may be tweaked before RIL’s financial services arm demerger as the current rule could lead to the firm’s exclusion from the index. On Feb 24th 2022, the NSE announced that the “Minimum listing history requirement in case of a new listing and companies traded subsequent…

A new reader took exception to our view of the Nasdaq 100, leading to an interesting conversation, parts of which are reproduced. “Why do you keep saying not to invest in the Nasdaq 100?” As discussed earlier, the main reason for our recommendation is “Not many investors appreciate that the NASDAQ 100 is a highly…