Arbitrage Funds – What are they? “I want my investment to be safe, tax-free and give me higher returns than an FD”. In search for this “ultimate” investment, one of the strategies investors use is arbitrage. Understanding arbitrage Simply put, you buy a stock in the cash market and you book an advance sale of it in the futures market where it is being quoted for a higher price. By locking the price in advance, you lock your return as well. Essentially, this is what arbitrage funds do. An arbitrage fund exploits price differential between cash and fu ..read more

The most important thing you will do today is update nominees in your investments. Nomination is important in all your assets/investment. It allows your nominees/heirs to, at least, access the money, if something were to happen to you. Even SEBI, the regulator, insists that all individual investor(s) irrespective of mode of holding, must either provide nomination OR opt out of nomination.  I say adding nominees is a better option. Here are some links to add/update nominees in your stocks, ETFs or mutual fund investments. For your stocks and ETFs, if you have a demat account with NSDL, us ..read more

ICICI Pru Asset Allocator Fund of funds invests dynamically in a mix of equity, bonds and gold. It is emerging in several shortlists and a top fund as per star ratings. Should you consider investing in this fund? A large part of the mutual fund industry has been to bring FD and LIC investors into its fold. Products such as FMP or fixed maturity plan, tools such as SIP, strategies such as asset allocation funds are created to provide a familiar experience to these investors who can then later be graduated to other products. ICICI Pru Asset Allocator Fund of funds aims to address a few issues fo ..read more

Why does an investor end up with a bloated mutual fund portfolio? This is a question I ask everytime I see one. I want to know the reasons, specially the investor’s thinking in doing so. Here’s how a mutual fund portfolio is looking. (Click on the image to download it) First, some quick observations: The portfolio has 43 unique schemes, 63 if you count the variations Almost every category of funds finds a place in the portfolio; It looks like a collector’s edition. Investor is under the influence of recent past performers and star ratings for fund selection There is little clarity on when to ..read more

You have heard this often – Choosing mutual funds only on the basis of past returns can go wrong. Well, i have come to think of it more as a behavioural issue. Take any investor, she wants the funds that do well. Past performance appears to be a safe indicator of what might come into the future. It also comforts the mind. No one feels good about losing money, even temporarily. But, how does it play out in real life? I put together data for various investments across asset classes- primarily using indices or investment based on those indices.(actual names are not important) Data Source: Investi ..read more

DSP MF sent out an email yesterday to the investors in the DSP Quant Fund about change in some of the ways in which the fund management will change. These include: Change in rebalancing frequency from half-yearly to quarterly. Covered call options as a way to add extra income in case of sideways markets. (This one has become quite a popular change since Parag Parikh introduced it in its Flexi cap fund a couple of years ago. It caused quite a uproar then) Removal of stock weight cap to 10x of the benchmark to accommodate very low weight stocks in the benchmark. Overall cap for stock weightage ..read more

It is not easy to be an investor in the markets. The markets manipulate the mind, constantly. The servant becomes the master. This is the story of how an investor falls. Take a look at the image below. Trivia: This time period is as long as I have been associated with the investment industry. This is an investors’ mutual fund portfolio. The equity portfolio is about 10% of the overall portfolio. Mutual funds are about 4% of the overall portfolio, or 40% of the equity portfolio. I imagine this is how it played out. Now, this investor started in a small way back in 2005/2006. Some friendly neigh ..read more

How to track mutual funds in one place continues to be one of the top reads on the Unovest Blog. If you have been with Unovest since a few years, you may remember the app that allowed you to do that and presented some simple, awesome reports. Sad, we had to discontinue it. One of the reasons was the proliferation of so many new mutual fund platforms that did the same thing and some, in fact, better. Interestingly, in the year 2021, one more platform came up with a far more seamless experience. This is MFCentral.com – a joint initiative by the 2 mutual fund registrars – CAMS and KFintech. Have ..read more

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