The following is an account of an ordeal to redeem from mutual funds in demat form. As mentioned several times earlier, holding mutual funds (except ETFs) in demat form makes no sense. Mutual fund units are already in electronic form! Unless an investor wants to (or rather tries to) sell closed-ended mutual funds before maturity,…

A reader has asked us to explain why diversification is the only free lunch in investing with some India-centric data. As the name suggests, free lunch refers to some benefits without a catch, fee, or cost. There is no free lunch in nature. Can there be one in investing? What does “Diversification is the only…

A reader wants to know, “I have just started a SIP in an equity mutual fund. I plan to continue this for 15 years. Can I expect a 15% return?”. The honest answer is, “No idea. No one knows”.  We have discussed this at length before. Do not expect returns from mutual fund SIPs! Do…

We are happy to announce a long-standing bug in the Freefincal Google Sheets Mutual Fund, and Stock Tracker has been resolved. This bug is not a formula or coding error on the sheet but due to an inherent deficiency in Google Sheets. The latest versions of the trackers have been updated with this resolution. Existing…

A reader asks after looking at the Sensex chart in the article – Do not stop or redeem your equity investments! Now is the best time to invest! (also shown below), “Why did you draw the Sensex chart in logarithmic scale? What is the benefit of doing so?” Let us start with what a logarithm is….

SEBI has created a new class of intermediaries called execution-only platforms (EOPs) for direct plan mutual funds. This will differentiate between an EOP and an RIA and provide clients with a clear grievance redressal mechanism. Those offering direct mutual fund investment portals are currently registered as investment advisors (RIA). SEBI defines an EOP as “Any…

A reader says, “You strongly recommend index funds for new investors. Why do you not recommend switching to index funds to other active fund investors? (Also wondering why you do not do it yourself)”. “Is it to avoid paying taxes on current gains if the size of the corpus is already substantial? I have also…

A reader asks,” Sir, almost my investment decisions are due to FOMO (fear of missing out). This has led to multiple stocks, mutual funds, fixed deposits, bonds and chit funds. I am ashamed to disclose the number. After reading your articles, I have understood that my approach is wrong. Can you please write an article…

Dr Rajesh Mevada writes, “What are debt fund / fixed income options for non-salaried, self-employed professionals and businessmen? For salaried investors, it is compulsory to contribute to EPF/ VPF, or NPS, which automatically takes care of its debt component. But for non-salaried investors, choosing debt fund investment is a bit difficult. So another relevant question…

A reader says, “I get the rebalancing and how the backtests prove how it works for most market conditions. But what about the quality of the assets we have chosen for investment?” “For example, if an Adani like situation arises for a fund house? How do we handle that? Well, one may say we must…

A member of the freefincal investor circle asks, Can we use the information ratio to analyze index funds? What is the information ratio? It is a measure of outperformance per unit risk associated with the outperformance. In other words, the information ratio is a risk-adjusted measure of the fund manager’s effectiveness in beating the benchmark. How…

A reader asks, “How important is turnover ratio in choosing a mutual fund? While selecting an index fund, should Turnover ratio be considered?” The portfolio turnover ratio is the lower of the total of new stocks purchased or sold over 12 months, divided by the fund’s average assets under management (AUM). For example if a…

A reader asks,  “If I pick any so-called large or mid cap schemes and if I check returns more than ten years, they have at least 12% CAGR and above. If my time horizon is above ten years and I’m happy with a 12% CAGR, can I stick to only one good fund and do…