ETF or Index Fund? Look beyond low expenses and tracking errors!

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….

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Active Mutual Funds Outperformance Consistency Report (March 2024)

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…

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Why Nifty Midcap150 Quality 50 index performance is a warning for factor investing fans

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)…

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Low Volatility Investing Decoded

Low volatility investing is a factor-based investment strategy. It involves picking a basket of stocks that exhibit the least standard deviation in daily returns over the preceding 12 months. About the author:¬†Akshay holds an MBA in Finance from Great Eastern Management School, Bangalore. His website is¬†akshaynayakria.com. His articles on personal finance and investing can be…

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Is tracking difference better than tracking error to evaluate passive funds?

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…

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Misconceptions about index investing you should ignore!

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…

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RIL Demerger: Curation risk in passive investing

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 ‚ÄúMinimum listing history requirement in case of a new listing and companies traded subsequent…

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