Category: Mutual Funds

A so -called bull market reveals interesting behavioural traits. The worry about the dip in performance of ICICI Prudential Value Discovery Fund is part fact and part behavioural (in my opinion, of course). A look at the performance of this fund.

One feeling a bull market brings about is, "why is my fund alone not performing when all other funds are giving huge returns?" Another is the feeling that the "bull run" will never end. It suddenly seems to investors that "this is how it is going to be, from now on" (until it all comes crashing down).  When both of them combine it suddenly feels as if I am holding a dud fund and that I must immediately exit and choose funds that has given "others" 29.5% in the last year and 43% in the last six months. read more

Suppose my current annualised return from an equity mutual fund is 25% and my expectation is only 12%, can I book the excess return (13%) as profit into a safe investment? What if I do this from time to time? Reader Prakash Bala wanted me to create a tool for this and in this post, I discuss if this approach makes sense in the first place.

The notion of an annualized return in equity or any market linked security is an amusing one. Most people assume the XIRR (for multiple investments) or the CAGR (for a single investment) refers to the rate at which the investment grows year upon year. This is completely wrong. The XIRR is merely an estimate of growth. A high value is obviously good but it does not actually mean much. Read this for a simple explanation of What is XIRR read more

Axis Dynamic Equity Fund NFO is yet another dynamic equity fund that proposes to tactically change its asset allocation to reduce risk (with no guarantee that the backtesting will work in the future). When Anish Mohan sent me the funds KIM*, his description piqued my interest to look deeper. Here is a description of its strategy. a backtest followed by a discussion.

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Many mutual fund SIP buyers and sellers incorrectly believe that SIP is a disciplined form of investing that reduces market risk because it averages the cost of purchase. In part 2 of "this is how a real market crash “feels” like", let us travel with a SIP started ten years apart and see for ourselves how well they manage to reduce risk.

Let us stop and think for a moment how the SIP works. Equate your corpus to the water in a bucket. Initially, you have no wealth to speak of and the bucket is empty. Each month you receive a salary - say some amount of water in the salary bucket. read more

So you think you have become financial literate by starting equity mutual fund SIPs assuming that they will beat inflation in the "long run"? Don't get too comfortable with equity. Don't assume those fairytale returns from DSP nanocap fund will last. This is how a real market crash "feels" like.

Preparing for a presentation can be really fun when you have to make all new slides. I got a gig at the RBI staff college next week and as I was preparing to give the audience post-lunch indigestion speaking about the market-risk, I thought it would be a good idea to turn them into a series of posts about risk (what else!) and what we need to know about the great industry/media propaganda - the SIP. read more