We shall look at the tracking error of Nifty Next 50 index funds from our tracking error report sheet to find out funds that have lowest tracking error. You can download this sheet to appreciate deviations from the benchmark in an intuitive way. In our previous study on how a market crash affects index funds,…
Continue reading →In this article, we show how the NAV of an index fund or the price of an ETF is affected by a market crash and discuss a simple, effective way to measure tracking error. That is how well the fund or ETF was able to track the underlying total returns index. Textbooks define tracking error…
Continue reading →Ranjith writes, “Thanks to your articles I have started my investment journey with Nifty 50 and Nifty Next 50 index funds. Should I also start a SIP in a Nifty Midcap 150 index fund for wider market coverage?”. Let us find out if this has been worth the effort in the past. From the point…
Continue reading →A common question investors have is, “should I use the Nifty or the Sensex for passive investing?” In this article, we report the return difference between the Sensex and Nifty for various durations to appreciate how a 30 stock index can differ from a 50 stock index. Sensex is the oldest stock index of India….
Continue reading →We present the result of SIP returns comparison: Nifty 50 vs active mutual funds (large cap, large and mid cap, mid cap, small cap and multi-cap) over the last fifteen years. The dramatic drop in outperformance seems to have started seven-eight years ago and not just from Feb 2018 as earlier believed. We had earlier…
Continue reading →“What return can I expect from a Nifty 50 SIP over the next 10 years?” This is a typical newbie question. We have pointed out that no one can or no one should expect returns from mutual funds. Yet we still see statements on social media that 10-12% return is “easily possible”. On what basis…
Continue reading →In this article, we present results from an analysis of the NIfty 50 portfolio over the last ten years. We find that the weight of the top five stock is currently the highest and six stocks dominate the top five positions. We use the portfolio of Nippon India ETF Nifty BeEs as a proxy for…
Continue reading →A combination of Nifty (N50) and Nifty Next 50 (NN50) index funds is enough for investors to create a well-diversified equity portfolio – large cap heavy (more of Nifty) or a midcap-heavy (significant exposure to Nifty Next 50). What if one avoids Nifty and invests 50% in Nifty Next 50 and 50% in debt? This…
Continue reading →A person with a profile name MoneyGita asks if dividend income can be obtained from index funds (or ETFs) after retirement instead of using stocks. Sometimes the answer to a question in personal finance seems like an obvious “no”, but on closer inspection seems, “why not?!”. A discussion.
Continue reading →Natesh asks, “I’m 24 and investing for my retirement goal which is around 30 years away. Asset Allocation: Equity 70% and fixed income 30%. Within the equity portion, Axis Nifty 100 Index fund – 75% and MO S&P 500 Index fund – 25%. Is this a good plan? Is it ok to use the Axis…
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