Behavioural Alpha Someone on Twitter mentioned that index funds create alpha. I don’t know how is that possible but what is certainly possible is that you can create investment alpha with your own behaviour. It is a known fact that the returns of an investment instruments (say mutual fund) and the actual return of an investor vary significantly. Why is that? Find out in this note on behavioural alpha.   Investment Journey of Rs. 10000 with various debt funds Quora is an interesting place and sometimes the questions asked there are too. I was asked to answer one such about a choi ..read more

Who doesn’t know about HDFC Mid cap Opportunities fund? It is one of the star funds from the HDFC MF stable. The fund started its journey in July 2007, almost at the height of the previous bull market. Its current fund managers are Chirag Setalvad and Rakesh Vyas. The fund seems to have done really well. The regular plan of the fund boasts point to point returns of 28.63%, 20.95%, 26.26% and 17.82% for 1, 3, 5, and 10 years respectively. (see image below) Compared to its benchmark, Nifty Free Float Midcap 100, the performance of which is 28.32%, 16.91%, 19.25% and 11.49% for the correspon ..read more

I made my first investment in mutual funds on Nov 5, 2004. It was a tax saving mutual fund. Before that, I was investing in stocks too. I invested in a few including an IPO. But stock investing was too much to handle for me. Given my laziness I could never make the effort to build a decent stock portfolio. (Yes, I believe it takes work.) I sold the IPO soon after pocketing some nice listing gains. Now, the next best option was investing through equity mutual funds. I invested these ready made stock portfolios managed by some of the best minds ..read more

“I made a couple of amazing investments today”, announced Nikhil. His voice was brimming with excitement. Nikhil and I had recently become friends. “OK. And what are those?” I was curious. “I have applied to this new fund offer of Select micro cap series N. The fund house is known for its stock picking skills in this category. In this new fund too, they will pick the best of the micro sized companies. In fact, the past returns of such offers has been in the 30s.” It looks like Nikhil was sold big time on this new fund. He himself was sounding like a fund salesman. “Is this a closed ended ..read more

“Vipin, I am planning to start investing in mutual funds. However, I do not want to go headlong into equity so will start with a balanced fund.” OK. That sounds good. Balanced funds bring the best of both the worlds to you. “Now, I was told about one of the most reputed funds – HDFC Prudence. But then I realise that HDFC has another fund – HDFC Balanced. I am confused.” Why are you confused Vinay? “Arre bhai! Which one should I invest in? And why are there 2 balanced funds in the same fund house?” OK, lets begin from the start. What were you told about HDFC Prudence Fund ..read more

Most probably, you now know that there are over 300 equity mutual fund schemes. Some of them have managed to attract the largest investments from you. I call them the popular funds. Typically, a scheme attracting more assets/investments due to its recent performance ( last 1 year, 3 year or 5 year). That is when the ranking and rating agencies put them up on the pedestal with high star ratings or No. 1 ranks. Not to forget that even the fund begins chest thumping and lets the world know the champion it is. As a result, investors take notice and pump in more money. I remember a c ..read more

Query: I was looking at a Monthly Income Plan (MIP) both conservative and aggressive as an alternative to FDs. Is that also a good option? My goal is to distribute my Debt portfolio from Bank FDs. Debt funds are as good as FD but with TAX benefit. I believe because of the small equity component ( 0% to 30%) in Aggresive MIPs they can offer a good return in debt portfolio with low risk which makes it better than Balanced Equity Funds and Debt Funds on either side of investments. Hence I believe along with Bank FDs, Debt Mutual Funds a person should also diversify and invest in Aggressive M ..read more

So, you have been trying hard to create your own mutual fund portfolio based on all the parameters you have known till now. You have read all of these posts too: John Bogle’s 8 Rules to build a mutual fund portfolio How to build a winning mutual fund portfolio Rule no. 9 – Character Counts If you still think it is not going to be possible for you, to humanly track all these things and build your own portfolio, we have something to offer you. We took it upon us to apply these criteria and come up with a list of funds. We then organised these funds into a dozen portfolios that you can ..read more

A few months ago, I wrote a post on 8 rules to build your mutual fund portfolio. These 8 rules are laid down by John C Bogle, the renowned founder of the Vanguard group, in his book “Common Sense on Mutual Funds”. These rules apply to those who would want to select non-index, actively managed funds. The 8 rules to build a mutual fund portfolio are: Select low cost funds Consider carefully the added costs of advice Do not overrate past fund performance Use past performance to determine consistency and risk Beware of stars Beware of Asset Size Don’t own too many funds Buy your fu ..read more

I made my first investment in mutual funds on Nov 5, 2004. It was a tax saving mutual fund. Before that, I was investing in stocks too. I invested in a few including an IPO. But stock investing was too much to handle for me. Given my laziness I could never make the effort to build a decent stock portfolio. (Yes, I believe it takes work.) I sold the IPO soon after pocketing some nice listing gains. Now, the next best option was investing through equity mutual funds. I invested these ready made stock portfolios managed by some of the best minds ..read more