SBI NIFTY ETF now has a AUM of a phenomenal 100,000 crores

Some very interesting info... SBI NIFTY ETF has an AUM of a stupendous 100,000 crores. In comparison, HDFC, ICICI and Kotak Nifty ETF funds have a total AUM under 3000 crores. So how did SBI NiFTY ETF get so much money? The answer is Employees Provident Fund Organisation (EPFO) which is investing almost 2500 crores per month.

More info at https://www.sbimf.com/en-us/other-schemes/sbi-etf-nifty-50

Note: this post was updated on 15 APR 2021.

SEBI move on multi-cap funds: Schemes may have to majorly re-allocate holdings

https://t.co/sH1DqUjhUR

— KPL (@vfmdirect) September 12, 2020

How much does your fund manager earn?

To stop SIPs or not

Many are asking whether they should stop SIPs. If you've emergency fund equivalent to one year of expenses, go ahead and continue SIPs. If not, better late than never, stop SIPs and build the required emergency fund.

Those who've lost jobs or have salary cuts, stop SIPs.

— D.Muthukrishnan (@dmuthuk) May 9, 2020

Those who sell products or services always say it's a good time to invest. That's their bread and butter.

As the economy is into recession, see your financial condition and decide. If you've surplus money not needed for next 10 years, then only go ahead and invest.

— D.Muthukrishnan (@dmuthuk) May 9, 2020

This buying the dip euphoria won't last. This is probably, the overzealous investing crowd rushing in just because there's a dip

This buying the dip euphoria won't last. This is probably, the overzealous investing crowd rushing in just because there's a dip. Of course, there will be rebalancing, etc. But it's hard to sift that. But from my vantage point, a decent chunk of the investors are just buying

— We're all going to die 😷 ☠️ (@passivefool) April 7, 2020

Index ETFs fail to track indices as market makers stay away

As the Nifty crumbled by 7.61% on 16th March, Exchange Traded Funds (ETFs) tracking it failed to keep up. Nippon India ETF Nifty BEES, one of the largest and oldest ETFs tracking the Index fell by just 2.23%. SBI ETF Nifty 50, which has assets under management of ₹64,464 crore, and is India’s largest equity mutual fund scheme, closed up instead of down. It closed with a gain of 1.16%. The tracking failure was not just limited to the Nifty. SBI Sensex ETF was down 3.61% even as the Sensex itself fell by 7.96%. Intra-day moves in the ETFs tracking India’s benchmark indices were also wildly out of sync with the underlying indices. This may have hurt retail investors trying to take advantage of the market correction.

An ETF is a passive mutual fund. Its aim is to simply give the same returns as the index it is tracking such as

Read more at https://www.livemint.com/market/stock-market-news/index-etfs-fail-to-track-indices-as-market-makers-stay-away-11584382453748.html

NIFTY made a 52 week low today... so what?

- these are monthly charts
- in trending markets, 52 weeks lows are buying opportunities the once in a year types
- nifty made 52 week lows once in 2011 and 2016 and then recovered
- by this logic, markets present a good opportunity for long term investors/ SIP

- disclaimer:
- I have no data for prolonged bear markets
- 52 week lows can last for longish periods with new lows forming
- this can happen till markets bottom out

- I exited my funds around 12200.... I am reinvesting from current levels
- you can invest in ICICI, HDFC, KOTAK, SBI nifty index fund (direct, growth option)

 

Net MF inflows at lowest in NOV 19

10 Things (Foreign) Fund Managers Say and What They Actually Mean

“What we have witnessed is a 10 standard deviation event”

“This didn’t show up in our backtest”

—


“The rise of passive investing and quantitative easing has materially distorted how markets function”

“Performance hasn’t been great”.

—

 “Cognitive diversity is incredibly important to us” 

“We have one woman on the team”.


Read more at https://behaviouralinvestment.com/2019/12/04/10-things-fund-managers-say-and-what-they-actually-mean

What fund managers said and what they meant

I've always found it funny when investors believe whatever fund managers say. That's because what they say and what they mean is almost always the exact opposite. Here's a handy guide of what they say and what they actually meant. https://t.co/0x0nt1Gd9S

— Passive Rajnikanth (@passivefool) December 7, 2019

MFs now investing mostly in NIFTY 50 companies only

60% of Institutional Money in 10 Stocks

Nice discussion between father and son on investing in MF/ real estate

A nice discussion between father & son-

Son (To dad): I want to invest Rs 10,000 every month in Mutual Funds through two SIPs of Rs 5000 each.

Dad: Why two funds?

Son: As Warren Buffet says ‘Never put all your eggs in one basket.’

— Varaprasad Daitha (@daitha12) June 13, 2019

Sorry boss, we have stopped redemptions due to a liquidity crisis

..........So typically I will be needing this debt money desperately to buy equities when there is a crisis and equity markets have crashed (now whether I am able to pull it off in reality is a different issue).

The last thing I want is for my debt fund to say that “Sorry boss, we have stopped redemptions due to a liquidity crisis”. Credit funds given their inherent structure have a high probability of getting scr****d up in these scenarios.

So my simple laymanistic reasoning being – why take so much tension for debt returns. As it is equities give me enough of it, but at least the long term payoff is worth the pain

5. From an overall portfolio perspective, the incremental returns mostly go unnoticed

Also if you really think about it, most of us have credit funds as a small portion of overall portfolio. Say Debt is 50% and Equity is 50%. You may have 30% of debt portfolio as credit funds. Now this means it is 15% of overall portfolio.

So assuming you get 1.5% excess returns over short term funds, for the overall portfolio it works to 0.23% excess returns. The effort to reward for this category from an overall portfolio level is too less.

Instead you can focus on reducing the expense ratio of the overall portfolio, which is intellectually boring but easier and more effective.

So make sure you think about the credit fund contribution from an overall portfolio perspective before you make the decision.

So broadly my thesis remains and I will continue to avoid credit funds.

Still want to evaluate Credit funds?

Read more at https://eightytwentyinvestor.com/2019/06/12/debt-funds-revisiting-the-framework/

Fire the mutual fund managers

Summary: you are better off investing in an index fund than any actively managed fund.



Source: https://us.spindices.com/spiva/#/reports

The DHFL and mutual funds mess explained in simple words

..Okay so if I give you a loan, I can say that you pay me back interest every year. For five years. But I can add a clause saying if you default on your loans to anyone else, then please pay me immediately. Because I am afraid that if you default on someone else he will come and take your sofa and TV and you’ll have nothing left to pay me later.

So when you do that, you create a covenant that triggers when you default somewhere else. This is a cross default covenant.

Because DHFL has cross default covenants on some other loans, some other fellow will come and say dude, my loan is immediately due.

Read more at https://www.capitalmind.in/2019/06/abeyaar-what-is-this-dhfl-default-and-debt-mutual-funds-crashing/

Thoughts On The FMP Fiasco / Mutual Funds Sahi Nahi Hai

My view - a mutual fund may have risks clearly defined in its investment strategy but there is this bigger risk of the fund manager not following the rules. As always, the manager does not lose the job, the fund earns the fees and investors lose.

.........

Anyone who has been following the coverage of the crisis in the media (mainstream and social), would have noted that much of the attention has been on Kotak MF, and on the so-called “safety” of FMPs.  In this post, I’d like to move that spotlight a bit.  The way I see it, firstly, the risks in investing in FMPs are, more or less, the same as they have been over the last several years.  It’s just that many investors, advisors, and fund houses, have been in denial over the fact that portfolio concentration is a bigger risk than credit quality in itself.  While I’ve talked at length about this previously, in this post, I want to talk about the questionable choices made by fund houses this time around, once this risk became a likely reality.  Secondly, I feel that looking at the FMP fiasco from the lens of the decisions of HDFC MF (rather than Kotak MF) offers a better picture of what has happened.  Investors in Kotak FMPs may have been the first to be visibly impacted, but it was HDFC MF that was the first to make the choices that brought us to where we are.

Read more at http://mfcritic.blogspot.com/2019/04/thoughts-on-fmp-fiasco.html

SIP and dip: Is the dream run over for systematic investment plans?

Janya Menghrajani Desai, 30, was interning with a financial planner in July 2017 when she learnt about Systematic Investment Plans (SIPs) and, considering her risk-averse nature, decided it would be a good way to put money aside as well as ensure it grows. “I’m not someone who takes the risk of investing in stocks directly, so when the planner told me about SIPs, I said why not,” says Desai.

In the past 20 months she has put in ₹1 lakh but made exactly ₹520 on it. “It’s not even 1 percent,” she says, adding that if she had even left it in her savings account, she would at least have made 4 percent. She plans to wait and watch for a few months after the elections in May and then, if the situation doesn’t improve, pull the money out.

Read more at http://www.forbesindia.com/article/investment-special-2019/sip-and-dip-is-the-dream-run-over-for-systematic-investment-plans/52823/1

Warren Buffett says this simple mistake has cost investors more than $100 billion

... the Berkshire Hathaway chief executive bashed active fund managers who charge higher fees on the promise that they can do better than the broader market. Buffett said most savers would be better off putting their money in low-cost index funds over the long term, and he estimated that investors wasted roughly $100 billion over the past decade on unnecessary fees.

The “massive fees” charged by active fund managers — who often promise to outperform the broader market — can leave savers worse off than if they had simply used a low-cost index fund that tracks a stock-market index, Buffett warned.

Read more at https://www.washingtonpost.com/news/get-there/wp/2017/02/27/warren-buffett-says-this-simple-mistake-has-cost-investors-more-than-100-billion

Solution: 

Obituary: Jack Bogle-the greatest friend of Investors

John C Bogle, investing legend and creator of low cost index funds passed away on 16th Jan 2019.

Bogle's innovative idea was creating the world's first index mutual fund in 1975. Bogle's idea was that instead of beating the index and charging high costs, the index fund would mimic the index performance over the long run—thus achieving higher returns with lower costs than the costs associated with actively managed funds.

Bogle is known for his insistence, in numerous media appearances and in writing, on the superiority of index funds over traditional actively managed mutual funds. He contends that it is folly to attempt to pick actively managed mutual funds and expect their performance to beat a low-cost index fund over a long period of time, after accounting for the fees that actively managed funds charge.

Bogle argued for an approach to investing defined by simplicity and common sense. Below are his eight basic rules for investors: