Category
Mutual Fund
**Foreign Portfolio Investors Reshuffling Sector Allocations in Indian Markets**
Recently, there has been a noticeable shift in the investment strategies of Foreign Portfolio Investors (FPIs) in the Indian stock market. While many are aware that FPIs have been selling, it is important to understand that this is not a simple sell-off. Instead, there is also a significant restructuring of their investments across different sectors. This change highlights a deeper trend in how global investors are adjusting their portfolios to align with market conditions.
**Decline in Financial Sector Allocations**
One of the most significant changes has been in the financial sector, which includes banks and financial services companies. Over the past year, FPIs have reduced their allocations to this sector. The allocation has dropped from 35% in September 2023 to 30.4% in September 2024. This decline represents nearly a 20% reduction in their investment in financials. The financial sector, which once attracted a large portion of FPI funds, is now seeing a shift away as investors look for more stable or growth-driven opportunities.
**Rising Interest in Consumer Discretionary and Industrials**
On the other hand, the consumer discretionary sector has seen a significant increase in FPI investments. The allocation to this sector has risen from 9.7% to 12.4%, marking a nearly 20% jump in just one year. This sector includes businesses related to goods and services that people buy with discretionary income, such as automobiles, entertainment, and luxury products. Similarly, the industrials sector has also seen a rise in allocation, growing from 8.3% to 9.5%. These shifts indicate that FPIs are becoming more interested in sectors that show potential for stable growth, especially in the post-pandemic world.
**Decline in IT and Energy Sectors**
Another noteworthy change is the reduced allocation in the Information Technology (IT) and energy sectors. The IT sector, which has traditionally been a strong performer, saw its allocation drop from 10.8% to 9.9%. This reduction shows that while IT still remains a significant part of FPI portfolios, investors are becoming more cautious about its future growth potential. Energy also witnessed a drop, reflecting changing global market dynamics and perhaps a shift towards more sustainable and diversified investment opportunities.
**Healthcare and Utilities Gaining Attention**
FPIs have increased their focus on more defensive sectors like healthcare, which saw an increase in allocation from 5.2% to 6%. This suggests that investors are looking for safer bets amid market volatility. Utilities, which provide essential services like electricity and water, have also seen a rise in FPI investments. These sectors are known for their stability, especially during economic downturns, making them attractive to investors who seek lower risk.
**Sector Rotation Instead of Mass Exit**
The changes in sector allocations reveal that FPIs are not simply exiting the Indian market. Instead, they are rotating their investments across different sectors. While there may be a net outflow of funds, the allocation adjustments show a strategic approach. FPIs are moving away from sectors that may be considered overvalued or have reached their peak, such as financials, IT, and energy. At the same time, they are increasing their exposure to more defensive and growth-oriented sectors like consumer discretionary, healthcare, and utilities.
Most of the changes are in line with our strategy except Energy Sector where in we've increase our allocation in last few months. It looks good to see that Big Money is following us or we're one step ahead of the FPI :)
Whatever may be reason, but seems that we're on the right path and doing allocation basis the data points recieved in our own system. This gives confidence on our long term wealth creation journey and add values to our clients trust and their portfolios.
Regards,
**GYC by Dinesh Aneja**
+91 88 00 20 3200
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Mutual Fund
Broader indices are currently down by 7%, causing concerns among many investors. Questions like "What happened to my portfolio?" and "Should I exit now and enter later?" are common during market corrections and I'm getting so many queries now. I had already warned in September and many a times before as well that valuations looks stretched for few sectors specially Mid and Small Cap index. If I talk about the stocks, they have been hammered ruthlessly in last few months. Out of 1900+ stocks listed on NSE India exchange, 70% were down from 10% to 50%. That was the reason that many investors were not able see much growth in their Portfolios which had more concentration of Small and Mid Caps.
Similarly, few sectors run very quikly in last few month but faceing correction now as they got over valued. In Equity Market, chasing returns / sector is very difficult but investors with long term horizon achieve this very easily with proper guidance and research.
However, it's crucial to remember that equity investment is a long-term game. The recent drawdown is just a small draw down of long term wealth creation journey.
Looking back, the Sensex surged from 3,000 to 21,000 between 2003 and 2007, showcasing the market's resilience over time. During the same time market corrected more than 10% on 14 occasions. Market once corrected by 29% and another time by 23% in the same bull run of 5 long years.
**One key piece of suggestion for investors is to avoid checking their portfolios daily. Emotions can lead to reactive decisions that may not align with long-term goals.**
Successful investors understand the importance of staying the course and not being swayed by short-term fluctuations. Patience and a focus on long-term gains are key to navigating the ups and downs of the market.
Regards,
**GYC by Dinesh Aneja
+91 8800203200**
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Category
Mutual Fund
**The Importance of Sector Selection**
Choosing the right sectors to invest in can make or break your investment strategy. There are years when one sector performs exceptionally well, while others struggle. For example, the automobile sector had a fantastic year in 2014, followed by two relatively bad years in 2015 and 2016. It bounced back in 2017 with an impressive 40% growth but then dipped again in 2018 and 2019 before recovering post-2020. These fluctuations highlight the importance of having a mechanism to exit underperforming sectors while staying invested in sectors that are on the rise.
**The Challenge of Predicting Sector Performance**
It can be incredibly difficult for investors, especially those not following any system or strategy, to predict which sectors will do well. The market is complex, and with ten major sectors to choose from, determining which ones will excel in any given year is a major challenge. Without the help of strategies that automatically select top-performing sectors, investors may find themselves lost in the maze of shifting market trends. This is where the value of structured investment strategies comes into play, offering a systematic approach to sector selection.
**Avoiding Thematic Investments Without a Strategy**
Many investors are tempted to put their money into thematic funds or specific sectors, hoping for a good return. However, this can often lead to long periods of poor performance if the sector they choose does not perform well. For instance, investors who focused on public sector units (PSU) in 2018 and 2019 experienced weak returns during those years. It was only in the last three years that the PSU sector began to recover, rewarding those who stayed invested. Similarly, the pharmaceutical sector had great years in 2014 and 2015, only to suffer four consecutive years of poor performance before bouncing back.
**Embracing a Dynamic Investment Strategy**
The performance of different sectors tends to be cyclical, with new sectoral winners emerging each year. This cyclical nature makes it important for investors to have strategies in place that can adapt to changing market conditions. Momentum strategies, for example, often automatically pick up on sectors that are currently performing well.
So far in last 5 years, we have done very well by rotating the money in Small Cap, Mid Cap, PSU, Infra, Pharma and continue to do well in upcoming sectors of the decade.
Regards,
GYC by Dinesh Aneja
+91 8800 203 200
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Category
Mutual Fund
Dear Investor,
India’s power sector, shunned by investors for long, is in the spotlight since the pandemic. Economic growth along with technological advancement and electrification threaten a demand surge like never before.
**Govt Policy:**
The National Electricity Plan for central and state transmission systems has projected a total outlay of Rs 9.2 lakh crore. The plan aims to meet a peak demand of 458 gigawatt (GW) by 2032 -- revised higher from the previous estimate of 380 GW. Power sector veterans foresee that power consumption in India will compound by about 7 percent over the next decade.
A detailed report by brokerage and research house MOFS points out that the peak power deficit used to be as high as 15 GW (13 percent of peak demand) in FY2010 and then declined to only 1 GW (or less than 1 percent) during FY19-21. It has been rising over the past two years; in FY23, it surged to 9 GW (4 percent of peak demand).
**Power Consumption and Technology Advancement:**
What’s noteworthy is the shift in power consumption away from core manufacturing industries to new demand drivers such as electric vehicles, data centres and electrification of energy demand. Besides, rising per capita income in India is driving higher household ownership of electrical appliances, too.
Then, there is a powerful price to pay for technological advancement. These technologies such as data centres and artificial intelligence systems that are reckoned to be disruptive, improve efficiencies and cut costs in the long run, are also electricity guzzlers. Ironically, every time consumers around the world undergo a technological upgrade, power demand witnesses a leg-up. For instance, “a simple Google search needs 0.3 Wh of power, while a Chat GPT query consumes 10x the amount of power of a Google search”, according to the Motilal Oswal report.
**Distribution:**
So, with India’s commitment to electrification in mobility and the data centre footprint set to leapfrog, the rising estimates for future power demand appear justified. Details of the NEP indicate significant outlays for transmission systems, storage and distribution and focus on renewable energy and green hydrogen loads into the country's electricity grid.
**What is there for Investors:**
For investors, the much-neglected power sector could turn into a bright long-term opportunity as we informed last week. Some international equity research houses are positive on power asset developers, generators and transmission and distribution companies that are poised to take advantage of the government capital expenditure in this sector. Energy exchanges, too, could gain as expansion of transmission may see new products being launched.
That said, investors must be mindful of uncertain and fluctuating return ratios in the sector, the impact of commodity and component prices on profitability and regulatory risks that have in the past been a stumbling block to private sector investment.
Regards,
GYC by Dinesh Aneja
+91 8800 203 200
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Category
Mutual Fund
Good Day Investors!!!
I must confess I have bearish view on midcaps-smallcaps for quite some time now. I never take such calls in haste and I am aware that I am not in business of making predictions but in business of managing risk in my client's portfolios.
Whichever way I slice and dice it my data analysis along with technicals and fundamnentals telling me this is a bubble of epic proportion that will be remembered after long time. We are looking at extremely frustrating phase in coming years. It will be worst for novice traders/investors who want quick money and havn't seen any major downside. The happiest people would be those who do SIP for long term keeping in mind India's growth story intact with Zero loss of emotional capital.
**My call is based on 3 things:**
- Economy is reaching overheated phase and earnings growth will be lower than expected. PE derating + low EPS growth can be killer combination.
- Monetary conditions will remain tight. Rates are cut during recessions not when economy is doing well. Even if are there are odd cuts here and there the liquidity will remain poor. Two other reasons why I don't see big rate cuts are-they hurt savers and lower mortgage rates can create frenzy in real estate crowding out middle class population. I would be surprised if 10Y Gsec dip below 6.5% in next 2 yrs.
- Big ticket purchase(housing, cars, travel) will slow down due to uncertainty in the job market. Recent data of Car manufacturers shows that More care in Yard than showroom as of last month. One of the reasons for big boom in big ticket purchase was massive wage hikes in 2021-22. Similary, lilquidity is drying up and it will drag market more than expected. All the assets class have run up a lot in last few years and it definitely need a break and overhaulign of the system.
Valuations 1 year back were what they were at the top of 2018. So its only got more and more ridiculous as the market has gone up relentlessly and without any breaks. I've personally shifted from Mid and Small Cap to defensive funds a month back. My system says that profit which is not booked is not a profit. My Long Term targets of Indian market remains the same for 2030 and beyond but current level looks like a bubble where new clients want to onboard every now and then and bus seems to be over crowded.
Stay Safe, control on greed and take a pause to run farther in long run.
Regards,
GYC by Dinesh Aneja
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Category
Mutual Fund
Ever wondered how your daily choices shape India's economy? From the smartphone in your hand for groceries you buy, your decisions fuel a consumption revolution. Today I want to share why the Consumption Fund is a unique investment opportunity.
India is transforming rapidly, it's now the fifth largest consumption market in the world and with the country's per capita income crossing $2,000, we are witnessing a significant surge in consumption spending.
But what's fusing this transformation? Let's take a closer look. India's consumption story is booming. With rising incomes, more people are spending on a better lifestyle. As the largest young population in the world, with a median age of 28, India is driving a shift towards diverse product preferences.
By 2031, India will comprise 25% of the world's working population. This is leading to rapid urbanization as a large young workforce migrates to cities for better job opportunities and higher living standards. The burgeoning urban middle class is driving a consumption revolution, trading up to premium products and experiences.
E-commerce and digital payments are enabling this spending spree, catering to evolving preferences while easy access to credit is bolstering spending power. This consumption surge presents substantial investment opportunities. That's where the Consumption Fund comes in.
The fund's strategic investing sector poised to benefit the most from these trends, including autos, FMCG, healthcare, retail, power, and e-commerce. The fund focuses on quality companies with strong growth potential and actively manages a diversified portfolio to balance risks and results. The New Fund offers you a chance to be part of India's dynamic road story.
So, join us in harnessing the potential of one of the fastest growing economies and be a part of phenomenal Growtw by investing in the fund which can create wealth for you in long run.
Thanks
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Category
Mutual Fund
**How IDCW (earlier known as mutual fund dividend) is different from stock dividend?**
When we receive a dividend from a stock we hold, it is sharing of profit earned by the respective company. When a company declares dividend on its stock, it does not bring down the stock price anyway. In layman’s term, we can refer receiving dividend from stocks as ‘extra income’ which is over and above the unrealized or realized gains we receive from holding that stock.
But in case of mutual fund, ‘dividend’ is compulsorily to be paid out from realized gains by the fund manager. So, paying out such ‘dividend’ of course results in a drop of its unit value or NAV as it is distributing income to certain unit holders (who opted for it) by withdrawing from its capital – thus the apt name for this activity is Income Distribution cum Capital Withdrawal.
**What is SWP (Systematic Withdrawal Plan) then?**
In case of SWP, fund manager has no role to play. Instead, you are at the driver’s seat. It is nothing but you are redeeming your units, irrespective of whether that means realizing gain or loss. In case of IDCW, it must come from realizing gains, no exception there. Also, declaring ‘dividend’ from a mutual fund scheme depends solely on the fund manager. It is up to him or her to decide, both the ‘dividend’ amount and frequency.
**How are SWWP and IDCW taxed?**
IDCW or ‘dividend’ income received from a mutual fund scheme adds to a unit holder’s income (under ‘income from other sources’) and therefore taxed accordingly. So, if you are in 30% tax bracket, you are then taxed accordingly. In case of SWP, it comes to you as ‘capital gain’ (short-term or long-term) and not as income for you. Now, we all know that short-term gain from equity mutual fund is taxed at 15% and long-term gain from equity mutual fund is taxed at 10% (beyond Rs. 1 lakh gain from equity holding in a financial year). So taxing of SWP income has nothing to do with what tax bracket you fall into.
**Conclusion**
If you want to receive regular income from your mutual fund holdings at your preferred terms – that is frequency and amount of income are decided by you – then go for SWP. The added benefit here is SWP’s tax efficiency over IDCW option.
Shakespeare said – What’s in a name? But in reality, naming a thing has lot to do with how we perceive a thing. Take, for example what we used to refer earlier (many of us still use that in casual terms) as ‘Dividend’ in a mutual fund. That time, it was often thought that dividend received from a mutual fund scheme is same as dividend received from a stock we hold, which it is not. To clear that confusion, SEBI rechristened it as IDCW (Income Distribution cum Capital Withdrawal). Did this rename help? Let’s see.
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Category
Mutual Fund
What a Rally in Equity Market and sweet end of 2023 !!!
Maa Laxmi has been very kind to all of us in our investing journey in the last few years.
To start with, we had the maximum exposure in Small Cap Index from 2017-18 and increased allocation in below sectors from March 2020 when Covid Lockdown was announced.
* Small CAP
* Mid CAP
* Infrastructure
* Capital Goods including real estate
* Commodities / Metals
* Highly bullish on PSU from 2021 (Post Budget)
* And ultra bearish on technology from Jan 2022.
Our aim from Equity Market was to buy in Lump Sum whenever Nifty went below 17000 and continue with SIPs. Luckily, I was able to add 4 installments out of 5 planned for Lump Sum and same was the status of our Ultra Bullish investors. We bought the fear at right time and got rewarded very well however, missed to add in Lump sum in May / June 2023 this year which was a miss at our end. All the bad news were absorbed by the Market from Covid - 2 to Ukraine war, Adani Saga etc.
And credit for this Crazy Rally goes to all of you who continued to buy and pushed DIIs giving upper hand against FIIs.
Our Investing Community is way ahead on targets when we assrued that we aim to get 15% and anything above would be extra bonus. Investors with high Risk are currently sitting at 30%+ CAGR return and moderate risk are at 22%+ CAGR from last 5 years and low Risk around 12% to 15%.
Thank you again for your Trust and belief in us. We will continue to serve our Investing community and make more awareness on Financial journey for our fellow Bhartiya's.
Wish you a very happy and prosperous English New Year 2024. An year, which would be known as Year of Protection and volatility !!!
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Category
Mutual Fund
Financial freedom is a dream for many, where you have the resources and flexibility to live life on your terms. While it may seem like an elusive goal, mutual funds can be a powerful tool to help you achieve this aspiration. In this blog, we will explore how mutual funds can contribute to your journey to financial freedom.
**→ Diversification and Risk Management**
One of the fundamental advantages of mutual funds is their ability to diversify your investments. Diversification means spreading your money across a range of assets, such as stocks, bonds, commodities. By investing in a mutual fund, you become a part of a larger pool of investors, which, in turn, allows the fund manager to diversify your investments effectively. This diversification helps to reduce the impact of poor-performing assets and manage risk.
**→ Professional Management**
Mutual funds are managed by experienced fund managers who make investment decisions on your behalf. These professionals are equipped with the knowledge and expertise to navigate the complex world of financial markets. They conduct research, analyze market trends, and strategically allocate the fund's assets to maximize returns while mitigating risks. This professional management ensures that your investments are in capable hands.
**→ Accessibility**
Unlike some investment options that require substantial initial capital, mutual funds offer accessibility to a wide range of investors. You can start investing with a relatively small amount of money. This accessibility makes mutual funds an attractive choice for individuals at various stages of their financial journey.
**→ Liquidity**
Mutual funds provide liquidity, meaning you can easily buy or sell your units. This flexibility ensures that you have access to your money when you need it. Whether you're saving for short-term goals or maintaining an emergency fund, mutual funds allow you to maintain financial flexibility.
**→ Automatic Investment with SIPs**
Achieving financial freedom often requires discipline and consistent saving. Mutual funds offer a solution through Systematic Investment Plans (SIPs). SIPs allow you to set up automatic, periodic investments, helping you save and invest consistently. Over time, this disciplined approach can significantly increase your wealth.
**→ The Power of Compounding**
Mutual funds harness the power of compounding, which can significantly impact your wealth over time. As your investments generate returns, those returns are reinvested, and your investment base grows. This leads to exponential growth and can be a key driver in achieving your financial goals.
**→ Flexibility**
Mutual funds come in various categories and cater to different investment goals. Whether you're saving for retirement, your child's education, or buying a home, there is likely a mutual fund category that aligns with your specific financial objectives. This flexibility allows you to tailor your investments to meet your unique needs.
**→ Transparency**
Investors receive regular updates on their mutual fund investments, ensuring transparency. You can easily track the performance of your investments and make informed decisions about your portfolio.
**→ Tax Benefits**
Certain mutual funds offer tax advantages. For example, Equity-Linked Savings Schemes (ELSS) can provide tax deductions under Section 80C of the Income Tax Act.
→ Goal-Oriented Investing
Mutual funds can be a vital tool for goal-oriented investing. Choose funds that match your financial goals to help you reach them in an organized way. This approach ensures that you are not just saving money but actively working towards your aspirations.
**Conclusion**
Financial freedom is not a distant dream; it's a tangible goal that you can work towards with the help of mutual funds. Through diversification, professional management, accessibility, liquidity, compound growth, and other advantages, mutual funds provide a path to financial independence. To make the most of this investment option, it's essential to select funds that match your risk tolerance, time horizon, and financial objectives. Regularly reviewing your investments and staying committed to your goals will help you realize your vision of financial freedom. So, start your mutual fund journey today and take the first step towards achieving your financial aspirations.
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Category
Mutual Fund
**How to invest in mutual funds without any prior knowledge about it?**
Investing in mutual funds can be a smart way to grow your wealth, even if you have no prior knowledge of the financial markets. Here's a step-by-step guide on how to start your mutual fund investment journey without any prior expertise.
**1. Educate Yourself:** The first and most crucial step is to educate yourself about mutual funds. A mutual fund is a pool of money collected from many investors which is managed by a professional fund manager. The manager invests the pooled money in a diversified portfolio of stocks, bonds, or other securities.
There are various types of mutual funds, such as equity funds, debt funds, hybrid funds etc. each with its own risk and return profile. Take some time to read articles, watch videos, and gain a basic understanding of these concepts.
**2. Set Clear Financial Goals:** Determine your investment goals. Are you investing for retirement, a major purchase, or simply to grow your wealth? Knowing your objectives will help you choose the right type of mutual fund and develop a strategy.
**3. Seek Professional Guidance:** If you're unsure about where to start, it's highly recommended to seek professional guidance. An expert can assess your financial situation, risk tolerance, and investment goals, and suggest suitable mutual funds thus reducing costly financial mistakes.
**4. Select a Mutual Fund:** Always makes sure that you choose a mutual fund that aligns with your investment goals and risk tolerance.
**5. Open an Investment Account:** To invest in mutual funds, you'll need to open an investment account. The account setup process is typically straightforward and involves providing some personal and financial information. The platform you choose will guide you through the necessary steps.
**6. Start with a Small Investment:** It's a good idea to start with a small amount of money, especially if you're new to investing. Many mutual funds have a minimum investment requirement, which can vary from scheme to scheme and AMC to AMC too. Make sure to check this requirement and ensure that it fits your budget. Starting small helps you understand how investing works without risking a lot of money.
**7. Monitor your investments:** After investing in a mutual fund, it's crucial to review your portfolio. You can track your investments through the online platform where you opened your account. Check the performance of your funds periodically and compare it to your investment goals. Be prepared to make adjustments to your portfolio if your goals change or if a fund consistently underperforms.
**8. Continuous Learning:** Investing is an ongoing process. As you gain more experience, continue to educate yourself about mutual funds and investment strategies. Read books, attend seminars, and stay updated with financial news. The more you learn, the better equipped you'll be to make informed investment decisions.
Investing in mutual funds without knowledge is possible, but it's important to know that all investments have risks. Mutual funds too can fluctuate in value, and it's possible to lose money.
If you ever feel uncomfortable making investment decisions on your own, don't hesitate to seek professional guidance. Education, planning, and expert advice can lead to a successful mutual fund investment journey.
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