Original analysis, reports, reviews and insights on developments in the mutual fund space and in-depth reviews
Arbitrage mutual funds suddenly came into the spotlight after the recommendations of Budget 2014, which adversely affected investors in debt mutual funds. They would now have to wait 3 years to apply indexation benefits to their capital gains from debt funds. For durations below or equal to three years, gains will be added to income…
Continue reading →The Omega ratio is an interesting performance evaluation metric that can be used for evaluating a mutual fund with its benchmark and also compare funds. In this post, I present a simple, non-technical description of the omega ratio along with some examples. The Omega ratio has been part of the mutual Fund risk vs return analyzer since…
Continue reading →Have you ever wondered what drives stock market returns? Is it linked to the GDP? Is it related to company earnings? Elections? RBI policy decisions? In this post, I list the findings of several studies which have attempted to ask the same question. This is a followup to the last three posts: Why should I…
Continue reading →“Why should I invest in equity if it comes with no guarantees?!” A mighty fine question wouldn’t you say? In this post, I discuss the nature of stock market returns and why despite the lack of guarantees, it still a necessary investment avenue for some. First of all, let me make it clear that I am…
Continue reading →The basic ideas behind how to manage a personal portfolio are discussed with a focus on the appropriate benchmarks for taking action. Reactions to yesterday’s post, A Mutual Fund SIP is Hope, Not a Strategy!, revealed a disturbing aspect of how many investors approach mutual funds. They are not interested in the inconvenient truth that a…
Continue reading →Too many investors believe that keeping their SIP alive and running over the ‘long-term’ is all that is needed to get ‘good returns’ from equity and achieve all their financial goals. Now that might happen in a fairy tale, but not in real life. In real life, the SIP is a method of buying mutual…
Continue reading →The Nifty50 Value 20 Index or the NV 20 represents the 20 most liquid value blue chip stocks selected from the Nifty 50 index. The performance of this index is analysed and compared with the performance of actively managed large-cap mutual funds. Nifty50 Value 20 Index Selection Criterion The 50 stocks that are part of the…
Continue reading →Here is a video description of how to select an equity mutual fund in under 30 minutes using the freefincal mutual fund screener (now in Mac!) and if necessary with the rolling returns calculator. The 5th version of the mutual fund screener was posted yesterday. I noticed a couple of bugs later. So I request…
Continue reading →Use this tool to automatically screen mutual funds based on returns and create a shortlist of consistent performers. The updated version corrects a bug and now includes Benchmark 1 to 12 year CAGRs. The tool grabs annual returns data from value research for different categories and calculates 12,11,10,9,8,7,6,5,4,3,2 and 1 year returns (CAGR corresponding to lump…
Continue reading →It is very common to see discussions on rent a house vs buy a house and pre-pay a home loan vs invest instead. Sooner or later, someone participating would utter the word ’emotional’ (or some variant of it). The rent vs buy choice is largely governed by emotions. The pre-pay vs invest choice is largely…
Continue reading →How I wish I could say, Yes, the size of a mutual fund affects its performance! Then a lot of arm chair extrapolaters can proudly declare, “told you so!”. Unfortunately, I (thankfully like many of you) have a weakness for evidence. So I can’t yes for there is not even a shred of proof towards…
Continue reading →‘Mutual funds are for sissies’. Excuse the expression, but I wonder if you have heard that or some version of that from stock investors? Many stocks investors (not all) tend to look at mutual fund investors as children of a lesser god. Not that I care, but I often see extreme generalisations both for mutual…
Continue reading →Ever wondered which to choose between Franklin Blue Chip and ICICI Blue Chip? Between HDFC Balanced and ICICI Balanced? Here is a mutual fund analyzer that goes beyond mere return comparison. It can be used each time you wish to make a choice or to compare how your fund did relative a ‘hot fund’ everyone is…
Continue reading →Four friends who had invested in the same equity mutual fund via a monthly SIP decided to estimate the growth of their investments together. The first friend beamed with joy, ‘my investment has beat (pre-tax) fixed deposits by almost 3%’! The second friend was not so happy, ‘if I had invested this amount in a…
Continue reading →Understanding the notion of a risk-adjusted return requires some maturity to think beyond mere returns. While comparing funds, a fund that offers a lower return with lower risk is better than one with higher return with higher risk. There are many risk-adjusted measures and one of them is the information ratio. The information ratio is a measure…
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